Japan pension fund GPIF announces halt to stock lending

Credit: REUTERS/TORU HANAI

Japan's Government Pension Investment Fund (GPIF), the world's largest pension fund, announced on Tuesday it has suspended stock lending, saying the practice is inconsistent with its stewardship responsibilities as a long-term investor.

Adds detail on GPIF

TOKYO, Dec 3 (Reuters) - Japan's Government Pension Investment Fund (GPIF), the world's largest pension fund, announced on Tuesday it has suspended stock lending, saying the practice is inconsistent with its stewardship responsibilities as a long-term investor.

"The current stock lending scheme lacks transparency in terms of who is the ultimate borrower and for what purpose they are borrowing," the GPIF said on its website.

The decision could curb short selling - bets that shares will fall in value - by reducing the shares available to borrow. Short sellers borrow shares and sell them, hoping to buy them back at a lower price, sell them and pocket the difference.

GPIF, which manages 160 trillion yen ($1.47 trillion) of assets, said it will continue to lend debt securities and may reconsider the halt to stock lending if it sees an improvement in transparency.

In the July-September quarter, GPIF reported a profit of 1.8 trillion yen. Amid Japan's ultra-low interest rates, the fund, which is closely watched by global investors, has retreated from unprofitable domestic bonds in favour of foreign assets.

($1 = 108.6400 yen)

(Reporting by Tim Kelly; editing by Andrew Heavens, Larry King)

((tim.kelly@thomsonreuters.com; +813-6441-1311;))

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