Abe to urge review of public fund policy

TOKYO - Reuters

Japan’s government is set to urge the nation’s public pension funds - a pool of over $2 trillion - to increase their investment in equities and overseas assets as part of a growth strategy being readied by Prime Minister Shinzo Abe, according to people with knowledge of the policy shift.

The steps, which could be announced today, represent the first time the Abe administration has looked to mobilize Japan’s massive pool of savings to support a growth agenda that aims to spur more consumer spending and corporate investment by pushing the economy toward 2 percent inflation.

It also suggests a new element of risk to the policies known as Abenomics since it would shift funding from the government to the private sector at the risk of driving interest rates higher.

Specifically, the government will set up a panel in July to consider the investment strategies of public funds, which, like other Japanese institutional investors, have relied heavily on investment in Japanese government bonds in recent years.

The panel review will be included as part of a package of steps intended to boost growth set to be announced today.