The depreciation of the U.S. dollar has only just begun. Nomura points out that Japanese investors’ risk of reducing U.S. bond holdings is significantly greater than that for stocks, with insurance companies playing a key role. The dollar share in foreign securities investments of nine major life insurance companies has reached a record high of 72%, well above historical levels. If these companies sell 10% of their U.S. Treasury holdings or increase their hedging ratio by 10 percentage points, it could trigger buying pressure for over ¥5 trillion (approximately NT$1.05 trillion) in yen, creating substantial selling pressure on the U.S. dollar.

As reported by Wall Street News, with the accelerated depreciation of the dollar, concerns are growing that medium- to long-term investors may withdraw capital from U.S. assets. The question remains: how significant would the impact be if Japanese investors pull out?

In a recent report, Yujiro Goto, FX strategist at Nomura Securities, and other analysts provided a detailed analysis of the structure of Japanese investors’ holdings of U.S. stocks and bonds, as well as the likelihood and potential impact of a reduction in these holdings.

Japanese Investors’ U.S. Asset Holdings: Highly Concentrated in Treasuries and Stocks

According to U.S. Treasury International Capital (TIC) data, as of the end of February 2025, Japanese investors held approximately $2.7 trillion (around NT$81 trillion) in U.S. securities (excluding short-term securities). Of this, 38% ($1 trillion, equivalent to NT$30 trillion) was in U.S. Treasury bonds, 22% ($0.6 trillion, or NT$18 trillion) in other medium- to long-term U.S. bonds, and 40% ($1.1 trillion, or NT$33 trillion) in U.S. equities.

In terms of U.S. Treasury holdings, the structure is relatively diversified, with insurance companies, banks, and pension funds each holding about one-third. Among them, insurance companies hold approximately ¥57.3 trillion (around NT$12.03 trillion) in U.S. bonds, representing the largest share.

Nomura’s analysis indicates that the likelihood of Japanese equity investors reducing U.S. asset holdings is relatively low. Pension funds typically exhibit passive investment behavior, focusing mainly on rebalancing operations and are unlikely to initiate large-scale sales of U.S. stocks. While retail investors, who invest through trusts, may slow their purchasing pace, they have rarely engaged in sustained selling in the past.