* PM Abe urges faster reallocation of GPIF's $1.26 trln
* Speculation that the fund already buying stocks, selling
* Shift to 20 pct stocks from 12 pct would be more than $100
(Recasts throughout with market impact, calculations)
By Takaya Yamaguchi and Chikafumi Hodo
TOKYO, June 6 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 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
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
"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
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 percent to Friday's two-month
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
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 percent of GPIF's
passively managed stock portfolio.
Some bond traders, conversely, suspect GPIF sold Japanese
government bonds (JGBs) last month, when selling was unusually
"We detected sales totalling about 100-150 billion yen in a
week shortly after the Golden Week holiday" in early May, one
JGB dealer said. "Such massive sales emerged in several other
days in May."
Another bond trader at a Japanese financial institution said
there was selling across all bond maturities, which would be
consistent with GPIF shrinking its bond portfolio within its
currently mandated limits.
GPIF targets 12 percent of its assets in Japanese stocks, 60
percent domestic bonds, 11 percent foreign bonds, 12 percent
foreign stocks and 5 percent short-term assets. The fund has
wiggle room of 6 percentage points either side of the core
target for domestic stocks and 8 points for JGBs.
GPIF said in January it would employ its asset allocations
more flexibly, allowing it avoid having to sell into rallies or
buy on declines.
Yasuhiro Yonezawa, the recently appointed head of GPIF's
investment committee, told the Nikkei business daily this week
that the fund could raise its investment in domestic stocks to
An increase to 20 percent from 12 percent would represent a
shift of 10.8 trillion yen ($105.39 billion) into stocks, more
than Softbank's 9.35 trillion yen market capitalisation.
Founded in 2001, GPIF conducted the biggest shake-up of its
investment strategy a year ago by revising its allocation
targets to raise the core weighting for Japanese stocks while
lowering that for domestic bonds.
($1 = 102.4750 Japanese Yen)
(Reporting by Takaya Yamaguchi and Chikafumi Hodo; Editing by
Eric Meijer and Kim Coghill)