8. Operating in a negative-interest-rate environment

Japan’s economy moved into a phase of mild recovery beginning in late 2012. Nonetheless, nbaブックメーカー domestic economy was not strong enough to achieve nbaブックメーカー BOJ’s target of 2% annual growth in consumer prices. Outside Japan, a number of unfavorable factors—such as nbaブックメーカー slowdown of China and other emerging-market countries and a stagnant natural resources market—suggested an uncertain outlook for nbaブックメーカー world economy. Against this backdrop, nbaブックメーカー BOJ decided to introduce nbaブックメーカー policy of quantitative and qualitative monetary easing with a negative interest rate (negative interest rate policy) in January 2016, which went into effect on February 16.

This policy measure effectively pushed down nbaブックメーカー yield curve. However, nbaブックメーカー introduction of nbaブックメーカー negative interest rate policy and lower bond yields would generally reduce income in nbaブックメーカー banking sector. For SMBC’s Treasury Unit, it meant that returns on Japanese government bond portfolios would diminish in nbaブックメーカー future.

To address this situation, nbaブックメーカー Treasury Unit rebalanced nbaブックメーカー portfolios in a flexible manner to increase income while carefully watching changes in monetary policies overseas, market trends affected by political situations and economic conditions. Also, anticipating nbaブックメーカー prolonged implementation of nbaブックメーカー negative interest rate policy and lower interest rates globally, nbaブックメーカー unit expanded nbaブックメーカー eligible category of investment to include corporate bonds and emerging-market sovereign bonds on top of nbaブックメーカー existing portfolio, comprised of stocks and bonds.