February 9, 2015 / 10:07 AM / 3 years ago

Japanese public institutions lead foreign share buying at record pace

GRAPHIC: Foreign stock purchases: link.reuters.com/pep93w
    
By Hideyuki Sano and Hirotoshi Sugiyama
TOKYO, Feb 9 (Reuters) - Japanese investors bought a record
amount of foreign shares in January in a sign that public
institutional investors, including Japan's $1.1 trillion mammoth
pension fund, are heeding Prime Minister Shinzo Abe's call to
chase higher-yielding assets. 
    Japanese institutional investors purchased 1.619 trillion
yen ($13.63 billion) of foreign stocks last month, data released
on Monday by the Ministry of Finance showed. Of that, mutual
funds, which oversee the assets of some public investors through
the various public funds that they manage, bought 695 billion
yen - a monthly record. Net purchases by trust bank accounts hit
a six-year high of 716 billion yen. Trust banks manage a big
part of the Government Pension Investment Fund's (GPIF)
investments, which are closely watched by global markets.
 
    Prime Minister Shinzo Abe has urged the GPIF, the world's
biggest public pension fund, to seek higher returns on riskier
assets as Japan's fast-ageing population means benefit payouts
by GPIF will increasingly outweigh fund contributions. In
October, the GPIF said it would boost its allocation on foreign
stocks to around 25 percent from 12 percent and cut the
weighting of low-yielding Japanese government bonds. 
    However, private institutional investors appear to be more
cautious about foreign shares. For instance, while Japanese life
insurers were net buyers of foreign stocks in six of the past
seven months, the net increase is small - at 200 billion yen
between July and January. 
    Many Japanese investors, still risk-averse at heart, are
wary of a pullback in foreign shares from current prices. In
January, the S&P 500 index traded just under an all-time
high hit in December, while the pan-European stock index
 is at a seven-year peak. "Few domestic institutional
investors are buying foreign stocks at the current high levels,"
said Tetsuro Ii, president of Commons Asset Management in Tokyo.
    ($1 = 118.76 yen)

 (Editing by Ryan Woo)

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