tokyo<u+2014>the head of japan<u+2019>s $1.2 trillion pension reserve fund<u+2014> the world<u+2019>s largest of its kind <u+2014>said wednesday he hoped the incoming trump administration would open up the u.s. infrastructure market more to foreign investors so the fund can grab a piece of the pie. the government pension investment fund<u+2019>s recent portfolio shift into stocks and foreign assets had been backfiring earlier this year because of the yen<u+2019>s surge and global economic uncertainty. but the gpif is quickly recovering, thanks in part to the market turnaround triggered by donald trump<u+2019>s victory in the u.s. presidential election. <u+201c>china is now struggling. europe isn<u+2019>t doing great. emerging markets aren<u+2019>t that good. the world economy will stabilize if the united states during the trump period plays a big role for stable global economic growth,<u+201d> gpif president norihiro takahashi said in an interview. <u+201c>that<u+2019>s the biggest relief factor now.<u+201d> last week, the gpif reported a <u+00a5>2.4 trillion ($21 billion) gain in the july-september period and is likely benefiting further from global stock gains and the yen<u+2019>s weakening since the u.s. vote, which raised the prospects of u.s. government spending to stimulate growth. the market movements might have generated <u+00a5>5.7 trillion in gains for the fund since the last quarter, shuichi ohsaki, rates strategist at bank of america merrill lynch, said in a note on friday. mr. takahashi said mr. trump<u+2019>s proposals for tax cuts and infrastructure spending would be positive for the u.s. economy. he said the dollar<u+2019>s ascent and u.s. stock gains were likely driven by the speculation about tax cuts, in particular a possible tax holiday for u.s. companies repatriating profits held overseas. even before the u.s. vote, the gpif was expanding its nontraditional investments such as infrastructure and private equity to generate more income and augment paltry bond returns at home. mr. trump has made a plan to spur $1 trillion worth of infrastructure projects in the u.s. over 10 years one of his priorities as president, promising in a victory speech to <u+201c>rebuild our highways, bridges, tunnels, airports, schools, hospitals.<u+201d> mr. takahashi said he was interested in investing in good u.s. infrastructure assets, but he said the u.s. market hasn<u+2019>t been as open to foreign investors as have europe, australia and canada. the recent rise in u.s. treasury yields is likely a reflection of market participants<u+2019> view that infrastructure spending will mainly be funded by u.s. taxpayers<u+2019> dollars. mr. takahashi said the gpif hoped to hire a <u+201c>gatekeeper<u+201d> next year who can select infrastructure investments for the fund. as of march 31, the gpif had invested <u+00a5>81 billion in infrastructure<u+2014>less than 0.1% of total assets. <u+201c>for a long-term investor, whether it be roads or ports, what<u+2019>s most appealing is stable cash flows that always come in regardless of interest rates or the price environment,<u+201d> he said. mr. takahashi said he wasn<u+2019>t as optimistic in the long run about the u.s. economy, because the tax cuts and infrastructure projects might not significantly lift the middle-class voters whom mr. trump promised to support in his campaign. <u+201c>it<u+2019>d take a longer time to assess whether the lives of the people who were frustrated and voted [for mr. trump] will indeed improve to some extent,<u+201d> he said. write to kosaku narioka at kosaku.narioka@wsj.com
head of japan pension fund interested in u.s. infrastructure investments - wsj
kosaku narioka