Japanese prime minister Shinzo Abe plans to ask the public pension funds to bolster their investments in Japanese stocks and overseas assets, people familiar with the matter told Taro Fuse and Noriyuki Hirata of Reuters. The third arrow of prime minister Shinzo Abe will be officially announced on Wednesday. Last week, T. Mani of Valuewalk reported that Japanese pension funds have more room for investments that may help the country.
It’s the first time the Abe government will mobilize massive savings of the country to spur growth. Shinzo Abe has vowed to achieve 2 percent inflation target in the next two years. His latest strategy will boost corporate investment and consumer spending. The move also poses some risk as it will shift funding from the government to the private sector. It may push up the interest rates.
Since the financial crisis, Warren Buffett's Berkshire Hathaway has had significant exposure to financial stocks in its portfolio. Q1 2021 hedge fund letters, conferences and more At the end of March this year, Bank of America accounted for nearly 15% of the conglomerate's vast equity portfolio. Until very recently, Wells Fargo was also a prominent Read More
Shinzo Abe To Form A Panel
Japan’s public pension funds have invested heavily in government bonds over the past few years. The Abe government will form a panel in July to figure out investment strategies for pension funds. The panel will create investment guidelines and ask the public pension funds to implement them before April 2015. The Nikkei 225 Index has gained about 56 percent since mid-November amid expectations that Shinzo Abe can revive the struggling economy. It has fluctuated dramatically in the past two weeks. So, some analysts doubt if Abe can really spark economic activity.
The basic framework of the plan will be unveiled on Wednesday, then the details will be finalized next week for the Cabinet’s approval.
GPIF And Other Pension Funds
The new investment strategy will apply to the Government Pension Investment Fund (GPIF) which has over 112 trillion yen ($1.1 trillion) of assets, and more than 100 other public funds and semi-government funds. Japan’s public pension funds have more than $2 trillion of combined assets.
GPIF has already been considering investing in domestic equities to benefit from the rallying market. GPIF, the world’s largest pension fund, was 60 percent invested in government bonds. It had just 13 percent in foreign equities by the end of December. It has been heavily criticized in the past for poor investment as burden continued to increase from Japan’s ageing population.
Abenomics, as people call Shinzo Abe’s reforms program, depends on encouraging investors to shift their portfolios from bonds to riskier assets like equities. Meanwhile, the Bank of Japan will mop up the bonds they offload.