Rumors of Japanese pension funds rebalancing are denied

BlockBeats message, July 13, Reuters sources said, citing insiders familiar with internal government discussions. Japan has no plan to change the target asset allocation for its national pension fund, but it may increase the scale of investment in domestic assets within the current floating range.

In response to this news, the yen and Japanese government bonds weakened again. The yen briefly depreciated 0.4% to 162.36 yen per $1, until Naoki Akihide from the Cabinet Secretariat, Kyokyo Chukawa, supplemented his remarks, which modestly eased the downward move. At a Monday press conference, Akihide said that GPIF reviews its investment portfolio every year, and if market conditions undergo material changes, it will initiate a formal adjustment process. The Ministry of Health, Labour and Welfare, which oversees the fund, declined to comment on the matter.

Last Friday, Japan’s Finance Minister KABAYAMA GAYUE said the government will roll out supporting measures to encourage retirement investment institutions such as GPIF to significantly increase their holdings of Japan’s domestic financial assets. The remarks quickly boosted the yen and Japanese government bonds. The market is betting that the GPIF—the world’s largest pension fund—will see capital inflows on the scale of 100 billion-level dollars into the domestic market. As of this March, GPIF’s assets under management totaled 293.6 trillion yen, equivalent to $1.81 trillion.