Monday, February 4, 2013

Bloomberg English News "Japan's Government Pension Fund to Diversify to Avoid Erosion of Asset Value"; Bloomberg Japan "Government Pension Fund Will Have Positive Return This Year"

It's about the same news, written by the same reporters.

It was quite common for both the Japanese news outlets that also have English language service and the US news outlets that also have presence in Japan to report different stories for their Japanese audience in Japan and for their foreign audience in English language when reporting on the Fukushima I Nuclear Power Plant accident.

When it comes to bad news for the economically clueless Japanese citizens, Bloomberg News seems to be doing the same as it reports on the decision by the Government Pension Investment Fund (GPIF) to start planning for diversification of their JGB-heavy portfolio.

I first saw the article in English at Zero Hedge, and looked for the same article in Japanese Bloomberg News to tweet to my Japanese followers. I found the Japanese article, written by the same reporters based in Tokyo, but I was completely confused. Instead of quoting the manager of GPIF warning the potential erosion of asset values because of the new LDP administration's policies as in the English article, the Japanese article starts out by saying:

The return will be positive two years in a row due to cheaper yen, says the manager of GPIF.


So, here are the opening paragraphs of Bloomberg English (2/3/2013) titled "Japan Pension Fund’s Bonds Too Many on Abe Plan, Mitani Says", by Anna Kitanaka, Toshiro Hasegawa & Yumi Ikeda:

Japan’s public pension fund, the world’s biggest manager of retirement savings, is considering the first change to its asset balance as a new government’s policies could erode the value of $747 billion in local bonds.

Managers of the Government Pension Investment Fund, which oversees about 108 trillion yen ($1.16 trillion) in assets, will begin talks in April about reducing its 67 percent target allocation to domestic bonds, President Takahiro Mitani said in a Feb. 1 interview in Tokyo. The fund may increase holdings in emerging market stocks and start buying alternative assets.

The GPIF, created in 2006, didn’t alter the structure of its holdings during the worst global financial crisis in 80 years or in response to the 2011 earthquake and nuclear disaster. Prime Minister Shinzo Abe and the Bank of Japan (8301) have pledged to restore economic growth and spur inflation, which will mean higher interest rates, Mitani said.

“If we think about the future and if interest rates go up, then 67 percent in bonds does look harsh,” said Mitani, who was appointed in 2010 after serving as an executive director at the Bank of Japan. “We will review this soon. We will begin discussions for this in April-to-May. Any changes to our portfolio could begin at the end of the next fiscal year.”

GPIF, one of the biggest buyers of Japanese government bonds, held 69.3 trillion yen, or 64 percent of total assets, in domestic debt at the end of September, according to its latest quarterly financial statement. That compares with 12 trillion yen, or 11 percent, in Japanese stocks; 9.6 trillion yen, or 9 percent, in foreign bonds; and 12.6 trillion yen, or 12 percent, in overseas stocks.

The fund, which took over management of government employee retirement savings when it was set up, returned to profit in the three months ended Dec. 31 from a 1.4 percent loss in the first six months of the fiscal year, Mitani said. He declined to be more specific. It needs to raise about 6.4 trillion yen this fiscal year through March 31 to meet payments.

And here's my translation of the opening paragraphs of the Japanese Bloomberg article (2/4/2013) by the same reporters:


Japan's Government Pension Investment Fund (GPIF) that holds the world's beggest assets revealed that this fiscal year's return will be positive, two years in a row, thanks to cheaper yen and higher stock market since December last year.


President Takahiro Mitani said in a February 1 interview with Bloomberg about the fund performance in the fiscal 2012 [which ends in March 31, 2013], "Stock prices have gone up and Japanese yen has gone down since December last year, so I assume the return has turned positive in a significant way. The annualized return up to the July-September quarter was negative, but I have no doubt that the return has turned positive." In the fiscal 2011, the return was 2.32%.


The rate of return at GPIF this fiscal year was minus 1.85% in the April-June quarter [1st quarter of the fiscal year], but in the July-September quarter the rate turned positive to 0.49% thanks to the rise in foreign stocks. The cumulative rate of return from April to September was minus 1.39%.

Rejoice, the government pension fund will make money this year!

Later, the Japanese article talks about Mr. Mitani's concern about the Japanese Government Bonds which makes up more than 60% of their portfolio, but in a much more subdued way; there is no talk of change in portfolio possibly starting at the end of the next fiscal year.

Let's see, GPIF has 108 trillion yen, and Mr. Mitani says the fund will make money. How much money will be the question, as Bloomberg English article says the fund has to raise 6.4 trillion yen to meet the payment obligations. That would be the equivalent of almost 6% return on the total asset.

Instead of focusing on writing the grammatically correct English devoid of meaning or on native-like pronunciation of English words and sentences (native in where is a good question, but), the Japanese people should really study English, so that they can read and understand the Bloomberg English article.

But even before their English lessons, they probably need economic lessons (and need to stop adoring Krugman, for a start).


JAnonymous said...

now, now, c'mon...

You can ALWAYS trust a Nobel prize. I mean, Nobel himself invented a highly lethal explosive.

The Nobel prize was awarded to countless worthy individuals or entities like Egas Moniz (the person who popularized Lobotomy), famous nuclear scientists (hey Marie), Obama and the EU !

Isn't that a bunch of insightful, trustworthy, human-nature loving people ? Krugman is just a nice addition to this great set.

Read receiving a Nobel prize as : "I, Bob* Nobel, hereby acknowledge you as a competent parasite of humanity. Be blessed, take this bribe, and do go on".

*: real name omitted for real anonymity

Those who know how academic research works nowadays, can provide an insight of how much money would be left to the likes of Yamanaka when it is split between actual participants, slave students, etc... hint hint: 0 is not such a bad guess.

Back to topic, the GPIF is screwed, so be it. Which national pension scheme isn't ? It's the new rage. Be broke and shout it out loud.

Anonymous said...

Just a small correction, Krugman does not have a Nobel price because there is no such thing as a Nobel price for economic sciences. The correct name is: 'The Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel'. Thus it is not a price of the Nobel foundation and hence it should be refered to as the price of the Swedish Reichsbank.

Alfred Nobel really disliked the fact that his invention was turned into a weapon. He invented dynamite, so that the oily unstable nitroglycerine needed for mining can be transported and handled saver.

Concerning the pension fund, well as usual the poor and ignorant middle class will have to pay the price. Sadly

Mohit Singh said...

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