Japan’s $1.75 trillion Government Pension Investment Fund (GPIF) is expected to increase its allocation to domestic stocks while reducing foreign bond holdings, according to a Bloomberg survey. Nearly half of the 21 analysts polled predict GPIF will raise its target for Japanese equities above the current 25% as part of a portfolio revamp starting in April.
A modest increase in Japanese stock purchases could significantly impact market sentiment, especially as the market recovers from a severe downturn following the Bank of Japan’s interest rate hike in July. A 5% increase in the equity target could lead to over ¥10 trillion ($69 billion) in net buying.
Analysts believe the government may encourage more domestic stock purchases to ease pension obligations and cope with rising inflation. GPIF reviews its asset allocation every five years and is likely to have regained its position as the world’s largest pension fund, partly due to the yen’s recent rebound.
Approximately 60% of analysts expect GPIF to adjust its holdings before an official announcement, as seen in previous years.