The GPIF and the future of the Japanese equity market

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The GPIF and the future of the Japanese equity market

Interview with Dr. Konari Uchida

Executive summary

Deloitte: It was announced that the policy asset mix for Japan's Government Pension Investment Fund (GPIF) will be changed from the 2015 financial year. As a result, the proportion of Japanese equities will increase from the current 12%, to 25%. How do you evaluate this change?

Dr. Konari Uchida
I think that this is a welcome change. The public pension system is a system that is supposed to continue indefinitely. I think that it is preferable to manage public pension assets over the long term with equities that have the potential to create profit over the long term. However, the use of equities means that there are certain issues that need to be resolved.

Deloitte: What issues need to be resolved?

Dr. Konari Uchida
There are two. The first is companies having the ability to increase profits. The second is companies placing importance on shareholder returns. Let me start by explaining the first issue. The ability to increase profits is the ability to maintain and improve Earnings Per Share (EPS). Japanese companies should be more mindful of profitability indicators such as EPS than they have been in the past. It is important that companies go beyond simply increasing profitability and reach profitability levels that exceed capital costs, which are normally shouldered by shareholders.

Please find the whole interview in the full article PDF available on the left.

(PDF - 202 KB)

Performance issue 16 - January 2015

Performance is a triannual digest, dedicated to investment management professionals, which brings you the latest articles, news and market developments from Deloitte’s professionals and clients. 

(PDF - 5,02 MB)
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