GPIF with further flexibility likely for now - Nomura

FXStreet (Bali) - Yujiro Goto, FX Strategist at Nomura, shares hs view on the latest GPIF developments, noting that the full-blown portfolio shift by the GPIF is unlikely to have started yet, despite the committee decided to temporarily remove the upper/lower limits.

Key Quotes

"According to Nikkei the GPIF investment committee decided to temporarily scrap the upper and lower limits for each asset class in its portfolio at its latest meeting on 5 August. According to Nikkei the fund is going to suspend the limits until its new basic portfolio is announced, which is likely in September."

"The GPIF has already announced that it will flexibly manage its portfolio in relation to its allowance range as it starts reviewing its basic portfolio, in its medium-term plan released in April."

"In this regard, the fund is likely to have already been able to deviate from its current basic portfolio, even before the decision to temporarily scrap the limits."

"Nonetheless, at this point the new decision by the investment committee may suggest that the fund may have proactively adjusted its portfolio even more to have more risky assets before the announcement of the new basic portfolio."

"We believe the full-blown portfolio shift by the GPIF has not started yet, and the investment committee's new decision may suggest the GPIF's portfolio shift could start before the announcement in September."