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As the world’s biggest pension fund nears the end of its switch from sovereign bonds into stocks, investors are looking at Japan Post Bank Co. as the next actor big enough to move markets.

The postal lender, the biggest holder of Japanese government bonds after the Bank of Japan, sold ¥5.1 trillion in JGBs in the three months ended June, after offloading a record amount of the debt last fiscal year. The $1.2 trillion Government Pension Investment Fund, known as “the whale,” said last week stock and fixed-income holdings were all within 3 percentage points of their targets, suggesting it has almost completed a planned shift into riskier assets including global bonds and shares.

The BOJ needs to find about ¥45 trillion in JGBs from the market to meet its annual goal for boosting the money supply to stimulate the economy. Japan Post Bank, with 49.2 percent of its ¥206.5 trillion held in domestic debt, fits the profile and needs to seek higher profits ahead of a possible public share sale this year.

“It wouldn’t be a surprise to see Japan Post Bank do to their portfolio what GPIF did to theirs,” said Yoshinori Shigemi, a global market strategist in Tokyo at JPMorgan Asset Management. “It’s important for both investors and the government that the bank enhance its corporate value and show that profits are going to grow by aggressively reshaping its portfolio ahead of its listing.”

Like GPIF, Japan Post Bank has been reducing its dependency on domestic government bonds. The bank owned ¥101.6 trillion in sovereign debt at the end of June, with the ratio falling below 50 percent of holdings for the first time.

Unlike GPIF, however, Japan Post Bank has not been increasing domestic stocks. It held just ¥900 million of local equities at the end of the first quarter, unchanged from March.

“Among the whales that the market has been focused on, the GPIF has had the biggest impact,” said Hidenori Suezawa, an analyst at SMBC Nikko Securities Inc. in Tokyo. “Others have massive assets, but it may take some time for them to match GPIF.”

The pension fund reduced domestic bond holdings to 38 percent of its assets at the end of June, down from about 50 percent a year earlier. The fund had 23 percent in Japanese stocks, up from 17 percent, while international debt made up 13 percent and 22 percent was in equities abroad in June. It targets 35 percent in JGBs, 25 percent each in domestic and foreign shares, and 15 percent in overseas notes.

“GPIF sold massive amounts of Japanese debt and the BOJ absorbed it very quickly,” said Shuichi Ohsaki, a rates strategist at Bank of America Corp.’s Merrill Lynch unit in Tokyo. “So now that GPIF’s selling has finished, the focus will be on who else is going to sell. Unless Japan Post Bank sells JGBs, the BOJ won’t be able to continue its monetary stimulus operations. It has to sell.”

Japan’s 10-year government bonds yielded 0.39 percent on Wednesday, down from about 0.5 percent a year earlier. The Topix index of the country’s shares has risen 14 percent in the past year, even after a global equity rout sparked a sell-off that pushed the measure into a correction.

Japan Post Bank saw returns from investments fall 6.3 percent in the three months ended June from a year ago. GPIF earned 19 percent more in the same period as stocks rose and the yen weakened, boosting overseas assets.

The postal bank said in April it plans to increase investments in assets aside from JGBs, such as foreign securities and corporate bonds, by 30 percent to ¥60 trillion in the fiscal year ending March 2018.

“Japan Post Bank needs to do something to make itself look attractive with its listing coming up,” said Nicholas Smith, a strategist at CLSA Ltd. in Tokyo. “The company’s going to be a lot more valuable if it’s able to get some decent returns. And with the market on its back at the moment, it seems a very good time to be doing that.”

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