World's big­gest pen­sion fund to buy $47b in Ja­pan stocks

The Pak Banker - - COMPANIES/BOSS -

TOKYO: The world's big­gest re­tire­ment fund has scope to buy $47 bil­lion in Ja­panese shares af­ter they tum­bled this year, ac­cord­ing to Daiwa Se­cu­ri­ties Group Inc.

The 139.8 tril­lion yen ($1.2 tril­lion) Govern­ment Pen­sion In­vest­ment Fund's do­mes­tic eq­ui­ties prob­a­bly fell to about 21 per­cent of as­sets at the end of Fe­bru­ary, short of the 25 per­cent goal for such in­vest­ments, the bro­ker­age wrote in a re­port pub­lished Tues­day. That means the Ja­panese fund could pur­chase as much as 5.3 tril­lion yen in shares, it said. GPIF may cut do­mes­tic bonds by 11.2 bil­lion yen as hold­ings prob­a­bly ex­ceed their tar­get, ac­cord­ing to Bank of Amer­ica Corp.'s Mer­rill Lynch unit. The bench­mark Topix in­dex has dropped 13 per­cent in 2016, re­duc­ing the weight­ing of the fund's eq­ui­ties rel­a­tive to the rest of its as­sets. A Bloomberg gauge of the na­tion's sov­er­eign bonds has added 3.4 per­cent through Tues­day. While GPIF has lee­way to de­vi­ate from its tar­get lev­els, fur­ther stock buy­ing from the fund could help sup­port the lo­cal mar­ket.

"GPIF in­vest­ment in Ja­panese stocks might well un­der­pin prices even as stocks feel down­ward pres­sure due to con­cern about the global econ­omy," Mer­rill Lynch strate­gists led by Shuichi Oh­saki wrote in a re­port Tues­day. If eq­ui­ties con­tinue to weaken, GPIF "will prob­a­bly have to fur­ther re­bal­ance its port­fo­lio." GPIF held about 38 per­cent of its as­sets in do­mes­tic bonds at the end of De­cem­ber and 23 per­cent in Ja­panese stocks, the fund said on Tues­day.

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