Japan's Biggest Pension Fund Blocked From Direct Stock Investing

  • GPIF must continue using asset managers, reports Kyodo News
  • Issue debated as part of fund's sweeping structural changes

A push by the world’s largest pension fund for permission to bypass asset managers when doing business in Japan’s stock market has reportedly hit a wall.

The proposal to allow the Government Pension Investment Fund to directly buy or sell stocks was halted, Tokyo-based Kyodo News reported Thursday. Japan’s $1.2 trillion fund had been seeking clearance to act directly rather than hiring asset managers in order to reduce operating costs and boost the size of its investments.

While a panel handpicked by Prime Minister Shinzo Abe recommended a complete overhaul of how GPIF manages Japan’s retirement money as the nation seeks to exit deflation, the freedom to directly buy stocks won’t be among the changes as overseers dropped the plans amid corporate-sector concerns of government intervention, according to Kyodo.

GPIF has been a key player in buoying Japanese stocks after the nation’s equity benchmarks entered a bear market. The fund doubled its allocations to Japanese and foreign shares in 2014, boosting returns to a record as stocks rallied into August last year. The share rout that followed left GPIF posting a 7.9 trillion yen loss in the three months through September.

The fund underwent unprecedented reforms in October, pruning back bond allocation to make way for more equities and a foray into alternative investments.

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