The world’s biggest pension fund posted its worst quarterly loss since at least 2008 after a global stock rout in August and September wiped US$64 billion off the Japanese asset manager’s investments.
The ￥135.1 trillion (US$1.1 trillion) Japanese Government Pension Investment Fund (GPIF) lost 5.6 percent last quarter as the value of its holdings declined by ￥7.9 trillion, according to documents released yesterday in Tokyo.
That is the biggest percentage drop in comparable data starting from April 2008. The fund lost ￥8 trillion on its domestic and foreign equities and ￥241 billion on overseas debt, while Japanese bonds handed GPIF a ￥302 billion gain.
Photo: AFP
The loss was GPIF’s first since doubling its allocation to stocks and reducing debt last October, and highlights the risk of sharp short-term losses that come with the fund’s more aggressive investment style.
Fund executives have argued that holding more shares and foreign assets is a better approach as Japanese Prime Minister Shinzo Abe seeks to spur inflation that would erode the purchasing power of bonds.
“Short term market moves lead to gains and losses, but over the 14 years since we started investing, the overall trend is upwards,” Hiroyuki Mitsuishi, a councilor at GPIF, said at a press conference in Tokyo. “Don’t evaluate the results over the short term, as looking over the long term is important.”
GPIF had 39 percent of its assets in Japanese debt at Sept. 30 and 21 percent in the nation’s equities, according to the statement. That compares with 38 percent and 23 percent three months earlier, respectively.
The fund had 22 percent of its investments in foreign stocks at the end of September, and 14 percent in overseas bonds.
The retirement fund’s stock investments are largely passive, meaning returns typically track benchmark gauges. GPIF’s Japan equities slid 13 percent, the same decline posted by the TOPIX, as China’s yuan devaluation and concern about the potential impact if the US Federal Reserve raises interest rates roiled global markets.
The fund lost 11 percent on its foreign equity holdings. Shares have rebounded since Sept. 30, with the TOPIX climbing 12 percent.
The fund can hedge its foreign-exchange risk if needed, Mitsuishi said, while declining to comment on whether GPIF had, or plans to start doing so.
GPIF’s 0.6 percent return on Japanese debt compares with an 0.9 percent advance on a Bloomberg gauge of the nation’s sovereign bonds during the period. The fund’s foreign debt investments lost 1.3 percent during the quarter, as the yen strengthened 2.2 percent.
GPIF had not posted a quarterly loss since the three months through March last year. The most recent results included returns from a portfolio of government bonds issued to finance a fiscal investment and loan program, with GPIF providing such figures since 2008.
If those are stripped out, the drop was the fund’s third-worst on record, exceeded only by declines in the depths of the 2008 global financial crisis and the aftermath of the Sept. 11, 2001, terror attacks.
Norway’s sovereign wealth fund lost 4.9 percent in the third quarter, with equity investments sliding 8.6 percent, its manager said on Oct. 28.
The Canada Pension Plan Investment Board delivered a 1.6 percent gain in the same period, with the fund’s President Mark Wiseman crediting diversification across assets and geographies for the result.
It held about 51 percent of its portfolio in public and private equities, 29 percent in fixed income and about 20 percent in real estate and infrastructure investments.
“Compared to our past portfolio, swings in returns have become wider,” Mitsuishi said. “But in the long-term view, we see there’s less risk of failing to meet pension payouts with the new portfolio.”
The Eurovision Song Contest has seen a surge in punter interest at the bookmakers, becoming a major betting event, experts said ahead of last night’s giant glamfest in Basel. “Eurovision has quietly become one of the biggest betting events of the year,” said Tomi Huttunen, senior manager of the Online Computer Finland (OCS) betting and casino platform. Betting sites have long been used to gauge which way voters might be leaning ahead of the world’s biggest televised live music event. However, bookmakers highlight a huge increase in engagement in recent years — and this year in particular. “We’ve already passed 2023’s total activity and
Nvidia Corp CEO Jensen Huang (黃仁勳) today announced that his company has selected "Beitou Shilin" in Taipei for its new Taiwan office, called Nvidia Constellation, putting an end to months of speculation. Industry sources have said that the tech giant has been eyeing the Beitou Shilin Science Park as the site of its new overseas headquarters, and speculated that the new headquarters would be built on two plots of land designated as "T17" and "T18," which span 3.89 hectares in the park. "I think it's time for us to reveal one of the largest products we've ever built," Huang said near the
China yesterday announced anti-dumping duties as high as 74.9 percent on imports of polyoxymethylene (POM) copolymers, a type of engineering plastic, from Taiwan, the US, the EU and Japan. The Chinese Ministry of Commerce’s findings conclude a probe launched in May last year, shortly after the US sharply increased tariffs on Chinese electric vehicles, computer chips and other imports. POM copolymers can partially replace metals such as copper and zinc, and have various applications, including in auto parts, electronics and medical equipment, the Chinese ministry has said. In January, it said initial investigations had determined that dumping was taking place, and implemented preliminary
Intel Corp yesterday reinforced its determination to strengthen its partnerships with Taiwan’s ecosystem partners including original-electronic-manufacturing (OEM) companies such as Hon Hai Precision Industry Co (鴻海精密) and chipmaker United Microelectronics Corp (UMC, 聯電). “Tonight marks a new beginning. We renew our new partnership with Taiwan ecosystem,” Intel new chief executive officer Tan Lip-bu (陳立武) said at a dinner with representatives from the company’s local partners, celebrating the 40th anniversary of the US chip giant’s presence in Taiwan. Tan took the reins at Intel six weeks ago aiming to reform the chipmaker and revive its past glory. This is the first time Tan
RSS