The Government Pension Investment Fund (GPIF) has room to buy as much as ?12.3 trillion ($76 billion) of additional government bonds without changing its asset allocation mix, according to Societe Generale, offering potential support for the debt market.
The projection assumes that one of the world¡¯s largest pension funds gradually increases its domestic bond holdings to the upper end of its existing allocation band, lifting the weighting to 31% from 26.9% as of March, strategists including Stephen Spratt said in a note. Reuters reported on Monday that Japan has no plans to alter the GPIF¡¯s benchmark portfolio allocations but is exploring ways to encourage greater domestic investment within the existing framework.
The estimate follows Finance Minister Satsuki Katayama¡¯s call last week for Japan¡¯s large pension funds, including the GPIF, to increase investment in domestic assets. Her comments fueled speculation that the government was seeking to channel more institutional money into Japan¡¯s bond market and support the yen, although expectations are that a near-term change to the GPIF¡¯s strategic asset allocation remains unlikely.
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