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The direction of the GPIF asset allocation was not a surprise - BBH

FXStreet (Barcelona) - Mark Chandler, Global Head of Currency Strategy at Brown Brothers Harriman notes that the direction of the GPIF allocation had been intimated for several months, and it was not a surprise.

Key Quotes

“Given his testimony before parliament a day or two before had offered a rather optimistic view, Kuroda's proposal to step up the QQE efforts was a reversal that took several colleagues off-guard.”

“It is difficult to separate the impact of this unexpected increase in the already aggressive monetary stance from the more aggressive diversification of the largest government pension fund (GPIF).”

“The dollar was already recovering from the mid-Oct swoon to near JPY105.25 and traded as high as JPY109.50 the day before the BOJ/GPIF announcements.”

“The direction of the GPIF asset allocation was not a surprise. It had been intimated for several months. It was the magnitude of foreign stock and bond components that was more aggressive than expected.”

“The portfolio flows contained in the September balance-of-payments report suggests that Japanese investors were already stepping up their foreign investment before BOJ/GPIF measures.”

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