TOKYO (Reuters) – Dai-ichi Life Insurance (8750.T), one of Japan’s biggest investors, has cut holdings of stocks and increased currency hedging on foreign bonds as U.S.-China trade frictions have escalated beyond expectations, its investment chief said.

In an usual move, the insurer drastically changed its market scenario and investment plan twice already since the start of the current financial year in April, Kazuyuki Shigemoto, chief general manager for investment, told Reuters.

Japanese insurers collectively hold 390 trillion yen ($3.7 trillion) of assets and their investment flows have a significant impact on the yen JPY= and bond markets around the world.

U.S. President Donald Trump’s tariff announcements, one in May to raise tariffs on $200 billion of Chinese imports and the other in August, to slap new 10% tariffs on $300 billion of Chinese goods, were the triggers for the changes, he said.

“Back in April, we had expected a trade deal between the United States and China around June and thus we had bet on a rise in dollar/yen, stocks and interest rates. But Trump’s tariffs announcement in May has changed the world,” he said.

Shigemoto said it would likely keep its portfolio defensive.

“You could say neither the United States nor China wants to push down their own economies forever, and therefore, they could reach a deal at some point. But even if that happens, we cannot see the economy recovering to levels before the start of the trade war,” he said.

In the past, such a major change happened in November 2016, after Trump’s surprising victory in the U.S. presidential elections, and in August 2015, when China’s yuan devaluation jolted global markets, the investment head said.

Dai-ichi Life does not plan to buy U.S. high-yield debt, despite their popularity among many bond investors globally as yields on government bonds in Europe and Japan have plunged into deep negative territory, given its cautious view on the economy and market.

But it looks to increase alternative assets, such as real estate investments because they retain decent returns.

“As a yen investor, it’s a rare asset class that can deliver 3% yield despite the risk of price fluctuation,” he said, referring to real estate assets.

Dai-ichi Life Insurance is Japan’s second-largest private life insurer, with 36.6 trillion yen in assets under management as of end-June.

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