Japan’s Pensions Bought Local Shares, Sold Bonds Last Quarter

  • Retirement managers turn net sellers of overseas assets
  • Stock-buying came as Topix index slumped at start of 2016

Japan’s public pension funds bought domestic stocks and sold bonds last quarter as the nation’s equities posted their worst start to a year in two decades and yields plumbed new depths below zero.

The funds purchased 965.4 billion yen ($9.2 billion) of local shares in the three months ended March 31, and sold 1.4 trillion yen of the country’s government bonds, an 11th straight quarter of net selling, according to Bank of Japan data published Friday. Pension managers also offloaded 86.7 billion yen in overseas assets, the first time they’ve been net sellers since the first quarter of 2014.

The BOJ results echo separate data from the nation’s bourse that showed trust banks, which manage pension money, were net buyers of Japanese equities almost every week in the first quarter while foreign investors sold. The Topix index tumbled 13 percent in the period and is down about 18 percent this year for the worst start since 1995, while the yen rose 6.8 percent against the dollar last quarter, its biggest such increase since September 2009.

Bond yields on 10-year Japanese government debt tumbled below zero in February after the BOJ said at the end of January that it will adopt negative interest rates on some bank reserves. Yields were minus 0.19 percent on Friday, while the Topix climbed 1.7 percent as of 10:13 a.m. local time. Pension funds held a total 40.9 trillion yen in Japanese shares at the end of March, and 52.5 trillion in local debt, the BOJ data showed.