Following the release of local investment signals last week, Japan's finance minister said economic growth may support GPIF's re-evaluation of asset allocation

The Zhitong Finance App learned that Japan's Finance Minister Katayama Satsuki made a key statement in the Diet on Thursday. She said that the government's current policy transformation is significantly increasing the potential growth rate of the Japanese economy, and this positive change will provide a strong and reasonable basis for the National Public Pension Fund (GPIF) to adjust its asset allocation and increase its holdings of local assets in future annual evaluations.

Katayama Satsuki pointed out that as the world's largest public pension fund, GPIF evaluates its investment portfolio in a timely and appropriate manner every fiscal year based on changes in macroeconomic assumptions. In particular, she emphasized that as government policies focus heavily on expanding investment, the Japanese economy is entering a key structural turning point. The increase in the potential growth rate of the economy should naturally become a core consideration factor for GPIF to re-evaluate its domestic and foreign asset allocation ratios.

This statement is a deep continuation and theoretical support for its policy initiative last Friday. On Friday, Katayama Satsuki first publicly expressed his intention to encourage pension funds to invest more in local assets. This statement instantly ignited market enthusiasm and directly promoted a significant rise in the yen exchange rate and Japanese treasury bond prices.

However, the adjustment of the trillion-level fund's position was not an overnight success. As revealed by people familiar with the matter on Monday, the Japanese government currently has no plans to immediately revise GPIF's target asset allocation ratio in a “one-size-fits-all” manner; instead, it is more inclined to move forward gently and flexibly within the allowable deviation of the current framework.

According to the current policy, GPIF distributes its huge capital into the four major sectors of domestic bonds, foreign bonds, domestic stocks, and foreign stocks at a rate of 25% each. Among them, for domestic bonds, the fund was given a wide margin of deviation of up and down 6 percentage points. Analysts pointed out that under the premise of not touching the 25% base allocation market, this 6% allowable deviation alone is enough to silently guide trillions of yen of capital back into the Japanese domestic financial market without alarming the market.

In order to dispel international market concerns about government administrative intervention in the financial market, Katayama Satsuki deliberately clarified policy boundaries and clearly defined a compliance red line at Thursday's meeting: “We will take all necessary measures to actively encourage investment in Japanese financial assets; however, the government must and will definitely respect the operational independence of pension funds, and we will never carry out any form of administrative intervention or coercive orders. I want to be absolutely clear about this.”

At the same Diet session, in the face of the sensitive situation where the exchange rate of the yen against the US dollar continues to be pressured and fluctuations increase around the 162 mark, Katayama Satsuki once again sent a strong signal of verbal intervention in the market.

She firmly stated that in the long run, improving the international competitiveness of the Japanese economy through policy transformation is the cornerstone of fundamentally maintaining global confidence in the yen. However, in the face of the current irrational fluctuations, she reiterated the Ministry of Finance's bottom line: “In any case, in response to excessive fluctuations in the foreign exchange market, we are ready to take appropriate action whenever necessary.”

According to market analysts, from last Friday's “verbal tests” to Monday's practical plan of “replacing major changes and allocations with existing bias space,” to Thursday's systematic explanation of “using potential growth rate increases as a proper name for position adjustment and rationalization,” the Japanese government is trying to guide the return of trillion dollars to the mainland to the greatest extent possible through a set of sophisticated policy combinations while maintaining GPIF independence, and form a synergy effect with foreign exchange verbal intervention to jointly build a “multi-dimensional line of defense” to defend against the depreciation of the yen.