Japan pension investment fund ban on direct stock trading to stand, for now: Tokyo

Kyodo

The government will shelve a plan to allow its giant pension fund to buy and sell stocks on its own amid fears that private-sector companies could be brought under state oversight if the fund becomes their direct shareholder, sources said Thursday.

The welfare ministry has considered lifting a ban on direct stock transactions by the Government Pension Investment Fund to cut costs and improve its investment capacity. But it decided not to include the plan in a bill to reform the GPIF to be submitted to the current Diet session, they said.

The ministry will reconsider the GPIF asset management rules around three years after the fund reform law takes effect, the sources said.

The GPIF, supervised by the Health, Labor and Welfare Ministry, currently relies on investment firms and trust banks to buy and sell stocks on its behalf. It paid commission charges totaling about ¥17 billion for the year ending in March 2015.

The direct transactions ban also prohibits the GPIF from exercising voting rights as a shareholder in a company and affecting its business operations.

Japan’s most influential business lobby, Keidanren, and the Japanese Trade Union Confederation have expressed strong opposition to lifting the ban. Also, it remains unclear whether removing the ban would drastically reduce the commission charges.

The GPIF, which manages employee and national pension funds, had ¥135 trillion in assets as of Sept. 30, with 21.4 percent invested in Japanese stocks and 21.6 percent in foreign stocks.