Japan Calls on Pensions to Increase Domestic Investments

Summary

Japan's finance minister urged pension funds to increase domestic investments, causing a yen rally and bond rally. Bloomberg's Brian Fowler discusses whether the massive GPIF might respond to the nudge, potentially giving a further boost to the yen and bonds, against a backdrop of persistent inflation and government efforts to shift household savings into domestic assets.

• Finance minister Satsuki Katayama called for pension funds to invest more in domestic assets at a regular press conference.
• The government sees a need for individuals to invest domestically to stay ahead of sustained 2% inflation.
• GPIF, the world's largest pension fund, currently keeps allocations at roughly 25% each for domestic stocks, domestic bonds, overseas stocks, and overseas bonds.
• The finance ministry does not directly oversee GPIF, but could nudge the health ministry to tweak allocations.
• If GPIF responds, Fowler says it would give a big boost to the yen and Japanese bonds.
• The initial remarks already boosted the yen from near four-decade lows and spurred a rally in bonds.