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22 Apr 2013
Forex Flash: Massive sovereign wealth fund gobbles up JGB – UBS
FXstreet.com (Barcelona) - Market attention is now shifting to the Government Pension Investment Fund in Japan. This giant asset manager has Y111.9trn ($1.19trn). It is not a sovereign wealth fund, however its size is likely to exceed established sovereign wealth funds globally. Currently, GPIF has around 60% of its assets in Japanese government and state FILP bonds.
In contrast, less than 13% of its assets are in Japanese stock, while foreign assets account for about 23% of funds. GPIF reports into the Ministry of Health, Labor and Welfare. “But given its prominence we expect that it is likely to support the government's macroeconomic objectives by shifting more of its funds towards domestic equities and foreign assets. Such an announcement by the GPIF would induce the rest of Japan's asset management and pension fund industry to follow suit. That would be sufficient in our view to push USDJPY into a higher 100-110 range.” suggests the UBS Research Team.
In contrast, less than 13% of its assets are in Japanese stock, while foreign assets account for about 23% of funds. GPIF reports into the Ministry of Health, Labor and Welfare. “But given its prominence we expect that it is likely to support the government's macroeconomic objectives by shifting more of its funds towards domestic equities and foreign assets. Such an announcement by the GPIF would induce the rest of Japan's asset management and pension fund industry to follow suit. That would be sufficient in our view to push USDJPY into a higher 100-110 range.” suggests the UBS Research Team.