Japan Eyes Greater Pension Fund Investment in Domestic Assets

Tokyo, July 14 (Jiji Press)–The administration of Japanese Prime Minister Sanae Takaichi is looking at a proposal to have the country’s Government Pension Investment Fund increase its investment in domestic financial assets, amid rising government bond yields and the weakening yen. “We want to pursue measures to support further investment in Japanese financial assets by pension funds, including the GPIF,” Finance Minister Satsuki Katayama said at a press conference on Friday. While she did not discuss the proposal in detail, her remarks caused the yen and bond yields to rise, due to speculation that funds could flow back from overseas to Japanese government bonds and other domestic assets. However, an official at an asset management company questioned the feasibility of the proposal. The GPIF has assets totaling more than 290 trillion yen, with domestic and foreign bonds and stocks each accounting for about 25 pct of the portfolio. Its basic portfolio policy is determined by a management committee of experts, and the panel is prohibited from considering factors other than the interests of those who pay pension premiums. Therefore, it is believed to be difficult to revise the policy based on the government’s views on the economy and exchange rates. Nevertheless, Katayama said at a press conference on Tuesday that the portfolio policy is “not a permanent code or anything,” adding, “Yen-denominated assets would become more attractive if we vigorously pursue our growth strategy.” Meanwhile, welfare minister Kenichiro Ueno, who oversees the GPIF, has expressed a cautious stance, saying, “I don’t think the current investment environment is far from what was assumed.” The recent weakening of the yen and the climb in government bond yields are believed to reflect concerns about fiscal health linked to the Takaichi administration’s economic policy, as well as worries about accelerating inflation. Even if the GPIF revises its investment policy, an official at a domestic securities firm said, “The root issue of fiscal deterioration would not change.” END [Copyright The Jiji Press, Ltd.]