GPIF set to pump $187bn into global equity markets

Tuesday, November 04, 2014

Further details of the Japan’s GPIF strategy shift emerged overnight outlining plans to pump $187bn into global equity markets as the world’s largest pension fund embarks on a new investment strategy. The news propelled Japanese benchmark indices to a multi-year high with the Nikkei adding 2.7% and the TOPIX gaining 2.6% after the long weekend. Stocks across the region were further boosted by the announcement that China would be spending $16bn on building trade infrastructure, supporting Chinese shares listed in Hong Kong 0.75% higher overnight.

The yen closed above 114.00 against the dollar yesterday for the first time since late 2007 as the recent monetary expansion from the Bank of Japan was seen by market participants as paving the way for a potential sales tax increase. According to a recent Bloomberg poll, market participants expect Prime Minister Shinzo Abe to go ahead with a plan to lift the sales tax rate from the current 8% which itself saw a 3% increase in April this year. A decision on whether to increase the rate to 10% from October 2015 is expected to be made before the end of the year with the government taking third quarter economic data into account.

Spot gold prices extended declines on Monday, starting the first trading session of the month on the back foot as it closed 0.6% lower. Intraday moves tested Friday’s low towards $1,161/oz before firming up to a close just above $1,165/oz. Speculators have cut long positions in the yellow metal over the past few weeks as prices reach their lowest level since 2010 with total stocks of exchange traded products tracking gold losing more than $1.3bn in October, the sharpest monthly decline this year. With the oil complex persistently weak, previous inflationary pressures which provided support for gold in the past have largely dissipated and we could subsequently see price weakness persist in the near term.

Nikkei rallies to a seven year high on GPIF move

NKY Index Nikkei 225 Daily 04 2014 11 04 08 07 10

JPY loses further ground against the dollar

JPY Curncy Japanese Yen Spot 2014 11 04 08 07 58

Events for today

0001

UK

Sep

Halifax House Prices

0135

JN

Oct

Markit Manufacturing PMI

0930

UK

Oct

Markit/CIPS Construction PMI

1000

EZ

Sep

PPI

1330

US

Sep

Trade Balance

1500

US

Sep

Factory Orders

1500

US

Nov

IBD Sentiment

 

 

Topics: Equities, Gold, JPY
More from: Kash Kamal