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Japan pension fund rumours boost markets

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JAPANESE stocks swelled yesterday on reports that the country’s colossal public pension fund was now preparing to make a significant move into domestic equities.

The Nikkei, which had dropped during the day, jumped upward around an hour before the end of trading, finishing at 15,232.27, a rise of 0.48 per cent.

The Topix index, which tracks the Tokyo stock exchange, also climbed by a similar 0.55 per cent, hitting 1258.12.

Japan’s Government Pension Investment Fund (GPIF) is reportedly about to expand its allocation of equities, moving from 12 per cent to 20 per cent, according sources who spoke to Reu­ters. The move could be interpreted as a victory for Prime Minister Shinzo Abe.

The fund is worth approximately £736bn, and acts as an indicator of the behaviour of other Japanese pension funds.

After years of price deflation, Japan’s savers are particularly used to purchasing government debt. But sovereign bonds now offer little in the way of a return, and the return of inflation to Japan has prompted investors to look increasingly at stocks.

The Japanese economy has been weakened recently by the impact of a sales tax hike, brought in by Abe, but the long-term change of at­titudes by investors is seen as a major aspect of his economic programme.