Practical analysis for investment professionals
07 November 2014

Poll: Where Will Bank of Japan’s Recent Actions Have the Greatest Impact?

Posted In: Economics

The Government Pension Investment Fund of Japan (GPIF) recently shifted its asset allocation by decreasing its allocation to government bonds (from 60% to 35%) and increasing its allocation to Japanese stocks and its exposure to foreign stocks (both from 12% to 25%). All international investors should consider this marked shift in the status quo.

We asked CFA Institute Financial NewsBrief readers where they think Japan’s recent actions will have the greatest impact.

The Bank of Japan recently announced an escalation of monetary stimulus and will buy government bonds up to 15% of its gross domestic product and increase the average duration of purchases from seven to 10 years. Where do you think this action will have the most impact (positive or negative) over the next three to five years?

Poll: Where Will Bank of Japan's Recent Actions Have the Greatest Impact?

There is a sharp contrast in our survey results. Although 41% of 583 total respondents think that the greatest impact will be on the yen exchange rate (presumably a lower yen), only 7% responded that this allocation shift will affect the real economy.

If both groups of respondents are right, perhaps they see something that neither Japanese Prime Minister Shinzo Abe nor Bank of Japan Governor Haruhiko Kuroda see: A lower yen cannot create products that foreigners want to buy.

Do you want to participate in future polls? Sign up for the CFA Institute Financial NewsBrief.

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Please note that the content of this site should not be construed as investment advice, nor do the opinions expressed necessarily reflect the views of CFA Institute.


About the Author(s)
Ron Rimkus, CFA

Ron Rimkus, CFA, was Director of Economics & Alternative Assets at CFA Institute, where he wrote about economics, monetary policy, currencies, global macro, behavioral finance, fixed income and alternative investments, such as gold and bitcoin (among other things). Previously, he served as SVP and Director of Large-cap Equity Products for BB&T Asset Management, where he led a team of research analysts, 300 regional portfolio managers, client service specialists, and marketing staff. He also served as a Senior Vice President and Lead Portfolio Manager of large-cap equity products at Mesirow Financial. Rimkus earned a BA degree in economics from Brown University and his MBA from the Anderson School of Management at UCLA. Topical Expertise: Alternative Investments · Economics

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