July 1, 2016 / 5:40 AM / 3 years ago

UPDATE 1-Japan GPIF's portfolio lost $50 bln last fiscal year -source

* GPIF to post first fiscal-year loss in 5 years

* All assets but JGBs hurt by market declines

* Results to be announced after July election (Adds comments, context)

By Takaya Yamaguchi

TOKYO, July 1 (Reuters) - Japan’s public pension fund, the world’s largest, logged some $50 billion in investment losses last fiscal year as the yen surged and Tokyo stocks fell amid global market turmoil, a person with direct knowledge of the matter said.

Portfolio losses for the Government Pension Investment Fund for the 12 months through March were between 5 trillion yen and 5.5 trillion yen ($49 billion-$53 billion), the person told Reuters on Friday, speaking on condition of anonymity as the results are not public.

This will mark the first full-year loss for the $1.4 trillion GPIF in five years.

The fund has taken a more aggressive investment stance in recent years, shifting towards stocks and away from low-yielding Japanese government bonds, in line with Prime Minister Shinzo Abe’s push to deploy more of Japan’s huge financial assets in riskier investments and boost economic activity.

The Nikkei stock average fell 13 percent last fiscal year, and it dropped a further 7 percent in the quarter ended June 30.

Preliminary GPIF results were presented to the fund’s investment committee on Thursday, showing wider losses for all asset classes except Japanese government bonds, the source said.

The GPIF plans to announce the fiscal-year results on July 29, a fund spokesman said. That is later than the usual early-July timing - and after a national election on July 10.

The spokesman declined further comment.

TIMING LINK DENIED

Deputy Chief Cabinet Secretary Koichi Hagiuda denied any link between the timing of the announcement and the upper house election and said final results for the fiscal year are still being compiled.

“The Government Pension Investment Fund is managing its portfolio firmly from a mid- to long-term perspective to ensure future pension payments” while the Abe administration works to pull Japan out of decades of deflation, Hagiuda told a regular news conference.

Masahiro Ichikawa, senior strategist at Sumitomo Mitsui Asset Management Co., said GPIF “was hit directly by the global stock declines, but pensions need to be managed for the very long term, so it’s difficult to make a judgment based on a single fiscal year.”

GPIF’s expected loss quickly was raised in the campaign for the upper house election, with the head of the main opposition party criticising Abe’s choice to expose public pensions to greater risk.

“I’ve been warning about the problem of GPIF doing risk-high investment,” Democratic Party President Katsuya Okada told a news conference. With stocks falling, “things are developing in the way I had feared,” he said.

“We’re seeing a serious situation where pensions could be cut in the future,” Okada said. “I’m also worried about GPIF’s huge presence in the stock market. As a free-market economy, it’s undesirable to have a situation where the government could influence stock moves.” (Reporting by Takaya Yamaguchi; Additional reporting by Takashi Umekawa, Yoshiyuki Osada, Leika Kihara and Kaori Kaneko; Writing by William Mallard; Editing by Chris Gallagher and Richard Borsuk)

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