Reuters Summit-Japan GPIF says could be net sellers in 2009/10

TOKYO, July 7 - Japan's public pension fund, the world's largest, said on Tuesday it could become a net seller in the markets this financial year ending in March 2010, but the scale of it sales is likely to be modest.

The Government Pension Investment Fund, which manages about 117.6 trillion yen ($1.2 trillion) in Japanese bonds, foreign bonds, domestic equities and foreign equities, has been a net buyer up until last financial year.

"We may sell some amount, but the sales are not expected to be big as we can cover the shortfall from maturing bonds," GPIF President Takahiro Kawase told the Reuters Japan Investment Summit.

"I don't expect (GPIF selling) to have a major impact on the market," Kawase said.

The GPIF may need about 4-5 trillion yen of funds to supply the national treasury to help repay benefits to pension recipients for the current year, Kawase said.

But the public pension fund may not have to sell assets heavily as it can make up some of the shortfall with proceeds from maturing Japanese government bonds, which are also expected to total about 4-5 trillion yen, he said.

Kawase said the GPIF did not sell assets in the April-June quarter.

In regards to its new model portfolio, the pension fund's allocation for bonds is expected to stay high, as it is in its current portfolio, Kawase said. But he added that he did not expect its target portfolio in equities to rise sharply.

GPIF is set to manage its funds under a new model portfolio from April 2010. ($1=95.34 yen)