By Tamiyuki Kihara <\/p>\n
TOKYO, July 13 (Reuters) – Japan has no immediate plans to change target asset allocations of its state pension funds but could work within existing allowable ranges to direct more investment to domestic \u200cassets, people with knowledge of government deliberations told Reuters. <\/p>\n
Finance Minister Satsuki Katayama said on Friday the government \u200cwould seek ways to encourage pension funds, including the Government Pension Investment Fund’s (GPIF), to make “substantially greater investments in Japanese financial assets.” <\/p>\n
The remark sparked gains \u200bin the yen and bonds as investors bet billions of dollars could be channeled into Japanese markets through GPIF, the world’s largest pension fund, which manages 293.6 trillion yen ($1.81 trillion) in assets as of March. <\/p>\n
While the government is exploring ways to boost such investments within the existing allowable ranges of the benchmark portfolio, the initiative won’t lead to immediate revisions to \u200cGPIF’s medium-term objectives, two government sources said. <\/p>\n
“Markets \u2060reacted much more than we expected,” the first source said, while acknowledging that Katayama’s remarks were not intended to imply a change in the asset allocation. The sources spoke on condition \u2060of anonymity due to the sensitivity of the matters. <\/p>\n
Katayama’s comments came after a draft of the government’s economic blueprint triggered a sell-off in yen and bonds by giving markets the impression dovish premier Sanae Takaichi’s administration would pressure the central bank to \u200bdelay \u200brate hikes. A minister in charge of the blueprint was later \u200bforced to admit the government will tweak language \u200cto soothe market jitters. <\/p>\n
GPIF is mandated to invest solely in the interests of pension beneficiaries and cannot deploy its assets to advance government policy goals. <\/p>\n
Under its current medium-term management plan, GPIF allocates 25% each to domestic bonds, foreign bonds, domestic equities and foreign equities. For domestic bonds, it allows a six percentage point deviation range around its target allocation. <\/p>\n
The first source did not rule out the possibility of directing more of GPIF’s funds into domestic bonds within that \u200callowable range. <\/p>\n
But he stressed that investment decisions of the pension funds \u200bneeded to be cautious and that even shifts within the permitted deviation \u200bband required convincing justifications. <\/p>\n
“Even if it doesn’t lead \u200bto a review of its basic portfolio, it’s possible for GPIF to increase domestic investment \u200cwithin the scope of existing discretion,” said Takahide Kiuchi, \u200bexecutive economist at Nomura Research \u200bInstitute, adding the government could nudge GPIF to make such increases. <\/p>\n
“Given the rise in long-term interest rates, Japanese government bonds have become relatively attractive safe assets offering higher returns,” he said. <\/p>\n
Oversight of the fund rests with \u200bthe Ministry of Health, Labour and \u200cWelfare. The ministry declined to comment when asked whether the government is considering changes to GPIF’s asset \u200ballocation. <\/p>\n
($1 = 162.0300 yen) <\/p>\n
(Reporting by Tamiyuki Kihara; additional reporting by Makiko Yamazaki, Yoshifumi Takemoto, Takaya Yamaguchi and \u200bKentaro Sugiyama, writing by Leika Kihara; Editing by Sam Holmes) <\/p>\n","protected":false},"excerpt":{"rendered":"By Tamiyuki Kihara TOKYO, July 13 (Reuters) – Japan has no immediate plans to change target asset allocations…\n","protected":false},"author":2,"featured_media":538845,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[5],"tags":[291,114,245467,187774,85,46,6972,60766,50911],"class_list":["post-538844","post","type-post","status-publish","format-standard","has-post-thumbnail","category-business","tag-asset-allocation","tag-business","tag-domestic-bonds","tag-gpif","tag-il","tag-israel","tag-pension-funds","tag-satsuki-katayama","tag-the-government"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/posts\/538844","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/comments?post=538844"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/posts\/538844\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/media\/538845"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/media?parent=538844"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/categories?post=538844"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/tags?post=538844"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}