The Strategist

Nikkei: Japan pension fund refuses to buy Chinese government debt

09/29/2021 - 07:35

Japan's State Pension Investment Fund (GPIF), the largest holder of pension savings in the world, has refused to add RMB-denominated bonds of the PRC state loan, Nikkei Asia reported, citing its own information. The decision was taken amid the risk of a collapse of China's Evergrande holding.

The GPIF has 193 trillion yen ($1.7 trillion) in assets, including 47 trillion in foreign bonds. The fund does not yet hold government bonds in renminbi, but it relies on the FTSE World Government Bond Index, which is scheduled to include Chinese government debt from early October. The amount of assets GPIF manages under this index is 20 trillion yen.

The Japanese pension fund has been studying the market for Chinese bonds and has been discussing not buying them even before the Evergrande situation, Nikkei reports. The publication notes that some large Japanese insurance companies have started to buy PRC government bonds, but their policies are generally less aggressive than those of Western investors.

Evergrande's main business is real estate, with debts exceeding $300 billion. Due to the pre-crisis situation, Chinese cities have begun to seize the proceeds from the sale of housing under construction. The NEV division, which combines automotive development and healthcare services, has indefinitely postponed its listing in Shanghai.


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