Yasuhisa Shiozaki, Japan's Health, Labor and Welfare Minister.
The Government Pension Investment Fund must review its asset allocations as soon as possible, Prime Minister Shinzo Abe said today, while Health Minister Yasuhisa Shiozaki said the fund was considering expediting the revamp. Since becoming minister in charge of GPIF two weeks ago, Shiozaki has stopped saying the governance law must be changed first. It may be hard to submit the bill in the parliamentary session from this fall, he told reporters today.
The comments by Abe and change in stance by Shiozaki buoy prospects for a quicker decision on GPIF’s new asset allocation. WhileAbe had always sought to
accelerate the review of the bond-heavy fund’s investments, Shiozaki’s insistence on the governance overhaul coming first had raised questions of the process being slowed.
Shiozaki’s reversal “takes away the possibility of a big delay in the announcement of GPIF’s new portfolio,” Kazuhiko Ogata, chief economist at Credit Agricole SA in Tokyo, said by phone yesterday. “Improving the investment system and hiring more experts are also needed for taking on more risk, not just strengthening governance. This probably also reflects Abe’s wishes for the fund to alter its portfolio while proceeding with those tasks.”
Abe said today at a forum in Tokyo that he is counting on Shiozaki, who is a strong advocate for change at the fund. Abe himself is placing heavy emphasis on the reforms, he said. Japan’s Topix index of shares rose 1.1 percent to 1,331.91 today, extending a six-year high, after the yen weakened past 109 per dollar for the first time since 2008.
New Responsibilities
GPIF is facing two major changes: the governance law revision, and the review of the fund’s asset allocations that is expected to see it reduce holdings of Japanese bonds while adding to investments in stocks and overseas assets.In press conferences after becoming minister Sept. 3, Shiozaki avoided answering questions on when the governance law should be passed. Shiozaki wasn’t immediately available to speak to Bloomberg, according to the public relations office at the health ministry.
Masaru Hamasaki, a senior strategist at Sumitomo Mitsui Asset Management Co., said Shiozaki’s reversal isn’t surprising and reflects his new position of responsibility. For Hamasaki, what matters is whether GPIF will buy more shares. It’s not practical to push through the bill so soon after taking office, according to Masashi Akutsu, a strategist at SMBC Nikko Securities Inc.
Shiozaki had been a lone voice on the need for the law change to come first. Seiji Kihara, a politician involved in drafting the bill that is expected to add a board of directors to lead the fund, said in August it may even be shelved. The fund’s governance structure can be reworked under the current law, Kotaro Mori of the health ministry said that month.
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