Tokyo will ease pension rules to help stocks

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Tokyo will ease pension rules to help stocks

By Mayumi Otsuma

International Herald Tribune, May 14, 2003

Tokyo - The Japanese government said Wednesday that it would ease rules on the transfer of shares managed by private pension funds to the government in an effort to halt the continuing decline in share prices.

Company pension funds have been liquidating shares in preparation for an October shift of assets managed on behalf of the government because current rules make it difficult to transfer stock. An easing of the rules is intended to discourage stock selling.

Under current rules, companies are allowed to return shares to the government if they are packaged to track at least 90 percent of all shares listed on the first section of the Tokyo Stock Exchange. Many smaller pension funds cannot meet that requirement, so they must sell stock.

Health and Welfare Minister Chikara Sakaguchi, who supervises the country's public pensions, said Wednesday that the government would try to ease the requirement to 80 percent, making it easier for pension funds to transfer stock to the government rather than selling holdings and handing over cash.

Prime Minister Junichiro Koizumi's government is trying to bolster shares. The Nikkei 225 stock average has lost nearly a third of its value in the last year and fell last month to a twenty-year low. That has inflicted investment losses on companies and undermined consumer confidence.

But some investors said the steps probably would not give them a reason to buy Japanese shares.

"None of Japan's problems have been resolved - the government has been repeating cheap trick measures for the last 13 years," said Shigeharu Shiraishi, a managing director at SG Yamaichi Asset Management Co. "What we've seen recently is just another one of those half-hearted measures."

The government will also bring forward the starting date of pension asset returns to September from October, Sakaguchi said.

An earlier start date may encourage funds to keep stock by reducing the risk that share prices will decline before the transfer to the government takes place.

The government will make it easier for a state-backed share-buying agency to buy shares from banks by using funds pooled in the postal savings and insurance, said Toranosuke Katayama, the public management minister, who supervises the postal agency.

Katayama also said post offices can would be allowed to sell investment trusts within the current business year , a step that may encourage individuals to buy more shares. The postal savings and insurance system may consider increasing stock investment if its capital is bolstered, he said.

"The steps being considered are just half-measures," said Tetsuo Inoue, a senior fund manager at UAM Japan Inc. "Bringing the percentage of stocks that company pension funds have to track to 80 percent from 90 percent in itself won't be enough to stop pension funds from selling their shares."

The government will also delay planned sales of shares of Nippon Telegraph and Telephone Corp. and Japan Tobacco Inc. "until the country's stock market recovers," Finance Minister Masajuro Shiokawa said.

The government plans to sell as many as 1 million shares in NTT and 333,334 shares in Japan Tobacco. Such sales would drive share prices lower, investors said.