Japan’s Government Pension Investment Fund lost 5.23 trillion yen ($51.9 billion) on investments in the April-June quarter as the yen appreciated and stocks fell due to such factors as the British vote to leave the European Union.
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GPIF, which managed 130 trillion yen as of June, had a negative return of 3.88 per cent in the quarter, translating into paper losses of 5.2 trillion yen.
Concerns over the U.S. economic outlook as well as UK’s vote to quit the European Union significantly hurt global equity markets, boosting demand for Japanese currency which was seen as a haven for investors in a time of economic uncertainty.
This is the second consecutive quarterly loss since the GPIF changed its policy to buy more risky assets in 2014, a decision driven by current Prime Minister Shinzo Abe’s government. “And US unemployment data in May was much worse than forecast”, said Norihiro Takahashi, the president of GPIF in a statement.
The fund’s Japanese shares sank 7.4 percent in the period as the benchmark Topix index lost 7.5 percent. The only asset class to post a profit was domestic bonds, which rose in value as the Bank of Japan’s negative interest rates sent yields lower.
It was the seventh worst quarterly return since GPIF started managing its assets in 2001, Shinichiro Mori, a GPIF spokesman, told a media briefing.
“The markets have since restored stability, and I believe stock markets are on a recovery trend”.
Under its new weightings as it has shifted out of domestic bonds, the GPIF now holds about 21 per cent of its investments in domestic equities, the same proportion in foreign equities, and 39 per cent in domestic bonds. Overseas equities made up 21 percent of assets, while foreign debt accounted for 13 percent.
Losses of 2.41 trillion yen came from investment in foreign stocks, and Japanese stocks and foreign bonds carried losses of 2.26 trillion yen and 1.52 trillion yen respectively, the GPIF said.
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Losses in domestic markets – the fund’s main investment focus, comprising 40 per cent of its assets – added up to $US22.5 billion.
