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Japan's GPIF posts 9.1t yen profit in Q4 as stock market recovers

[TOKYO] Japan's Government Pension Investment Fund (GPIF), the world's largest pension fund, on Friday reported a profit of 9.1 trillion yen (S$114.4 billion) in January-March, swinging from a record loss in the prior quarter, thanks to an upturn in stock markets.

The fund, which managed 159.2 trillion yen of assets as of end-March, had quarterly profits of 2.7 trillion yen on domestic stocks and 5.1 trillion yen on foreign equities, its earnings results showed.

Japan's Nikkei stock average rose 8.4 per cent during the quarter, boosted by speculation the US Federal Reserve's next policy move would be an interest rate cut.

The GPIF had suffered a record 14.8 trillion yen loss in the three months ended in December as worries about the escalating US-China trade war battered global markets.

Given the ultra low interest rate environment in Japan, the fund has retreated from unprofitable domestic bonds and pushed into foreign assets.

It had 26.3 per cent of its portfolio in Japanese bonds as of end-March, compared with 36.15 per cent in September 2016 when the Bank of Japan launched its policy of pinning 10-year government bond yields around 0 per cent.

By contrast, the GPIF's foreign bond holdings accounted for 16.95 per cent of its portfolio in the latest quarter. It bought a net 630 billion yen of foreign bonds during the quarter, according to a Reuters calculation based on the fund's results.

The fund allocated 23.55 per cent to domestic stocks and 25.53 per cent to foreign stocks.