Japan PM pushes GPIF to buy more stocks

TOKYO, June 6 (Reuters): Japanese Prime Minister Shinzo Abe pressed the world's biggest pension fund on Friday to quicken a shift toward investing more in stocks and less in bonds amid market speculation the fund may already have started moving cash into riskier assets.
As Abe seeks to end nearly two decades of deflation, his government is pressing the $1.26 trillion Government Pension Investment Fund (GPIF) to diversify its domestic bond-centric portfolio into assets such as Japanese stocks to generate higher returns for the fast-greying population and boost economic activity.
GPIF's managers will begin an asset-allocation review next week which could easily pump more than $100 billion into the Tokyo stock market - more than the market value of Softbank Corp , Japan's second-largest company by market capitalisation.
Global financial markets are keenly watching GPIF's strategy review because the fund - bigger than Mexico's economy - is a huge investor and a bellwether for other Japanese institutional investors.
"I believe a review in GPIF's allocation must take place as soon as possible," Health Minister Norihisa Tamura told a regular news conference after receiving the instruction from the premier.
Tamura, whose Ministry of Health, Labour and Welfare oversees GPIF, would not say when the review will be completed, but market players had already been expecting results by around autumn, earlier than the initial target of March.
In recent weeks, expectations of fresh GPIF buying have helped Tokyo stocks rebound 8 per cent to Friday's two-month high.
Some market participants wonder if GPIF may have begun shifting assets ahead of the formal reallocation, selling Japanese government bonds and buying shares.
Trust banks, for example, which manage much of GPIF's stock portfolio, bought an unusually large 246.6 billion yen of Japanese stocks more than they sold in the last week of May and 177.2 billion yen the previous week, Tokyo Stock Exchange data showed.
This brought their May purchases to 687.3 billion yen, the most since March 2009.
It is unclear how much of this money might be from GPIF, but market players view the trust-bank flows as a possible gauge of the giant fund's moves. Trust banks manage 70 per cent of GPIF's passively managed stock portfolio.
Some bond traders, conversely, suspect GPIF sold Japanese government bonds (JGBs) last month, when selling was unusually heavy.