From Bank of America/Merrill Lynch analyst Shusuke Yamada, on the expected changes coming in Japan’s massive state pension fund, the Government Pension Investment Fund’s (GPIF) model portfolio.
Notes that while they are yet to be announced, are likely in August some time … and that they won’t come into effect until April 2015, but the GPIF can tweak allocation prior to official implementation, or even before the allocation announcement”)
Says:
- “GPIF’s “Great Rotation” could generate significant portfolio outflow and impact the currency markets over the long term”- adds that a shift into foreign assets is bearish for the yen
- “The impact could manifest more in thinly traded cross/JPY pairs than USD/JPY or EUR/JPY; EM currencies in the standard benchmarks are likely to benefit most in the form of cross/JPY.”
- Bank of America/Merrill Lynch sees USD/JPY at Y108 at the end of 2014
- Sees further yen weakness in 2015
