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Japan’s cabinet secretary says GPIF can adjust portfolio as needed

GPIF manages about $1.8 trillion, and its current plan includes fixed 25% targets for domestic bonds, foreign bonds, domestic equities and foreign equities.

Reported · Written up by our desk · Central Banks

Japan’s chief cabinet secretary Kihara said the Government Pension Investment Fund has a mandate to tweak its basic portfolio as needed, a stance that follows renewed discussion about potentially steering more of the world’s largest pension fund toward Japanese assets. Forexlive reports that the comments helped lift the yen and Japan’s domestic bond market earlier, after speculation that the shift could move billions of dollars into local markets.

The backdrop includes earlier reporting that Japan has no immediate plans to change target asset allocations for state pension funds, though any directive could still be implemented within existing allowable ranges. Forexlive added that one source said the Friday remarks were not intended to signal an asset allocation change, while the cabinet secretary’s later language hinted at a possible adjustment.

Market pricing moved as well. According to Forexlive, USD/JPY climbed back toward 162.35 after the earlier remarks, before paring its advance to around 162.00-10 following Kihara’s clarification.

Forexlive noted that under the current GPIF plan, allocations are set at 25% each for domestic bonds, foreign bonds, domestic equities and foreign equities, with domestic bonds allowed to deviate by up to six percentage points around target. The outlet said recent increases in Japan’s long-term rates have made domestic government bonds look more attractive versus foreign peers, but it remains unclear how strong any actual push will be.

Latest closeUSD/JPY 161.67 ▼0.5%

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