A Bloomberg survey suggests Japan’s $1.75 trillion government pension fund may increase its purchases of domestic stocks and scale back its purchases of foreign bonds, a move that would have ramifications for global markets.
Nearly half of the 21 analysts surveyed said the Government Pension Investment Fund (GPIF) would raise its allocation target for Japanese equities above the current 25% as part of a portfolio overhaul from April. They said an increase in foreign bonds was highly unlikely as it would imply yen sales that could weaken the currency.
Even a modest increase in Japanese stock purchases would bolster sentiment in a market still recovering from its worst fall in decades after the Bank of Japan raised interest rates in late July. A gain of just 5 percentage points in the equity target could trigger net purchases of more than ¥10 trillion ($69 billion).
