China’s summer market meltdown has claimed another victim — Japanese pensioners.
Japan’s government pension fund — the world’s largest — lost $64 billion in the three months to September 30, and much of that was due to crashing share prices in China.
Global stocks tumbled in August and September, driven by the crash in Chinese markets. Volatility remained as concerns grew over a wider economic slowdown.
The Japanese fund’s value fell 5.6% to 135 trillion yen ($1.1 trillion), according to a report released Monday. The fund’s holdings of Japanese stocks lost nearly 8%, while its international stock holdings tumbled 11%.
Japan has the oldest population in the world — more than a quarter of people are over 65, and nearly 30,000 turned 100 last year. Saving in the government pension fund is mandatory for all Japanese, and investment managers face growing pressure to generate higher returns for the rapidly aging population.
In 2014, the fund decided to take on more risk by investing a greater proportion of its assets in equities, rather than bonds. Nearly half of the fund is now in stocks. Despite the staggering loss, the fund didn’t announce any change in strategy Monday.
Japan’s pensioners are not the only ones feeling the pain of this year’s market turmoil.
Norway’s sovereign wealth fund also posted big losses recently as a result of global stocks rout. Its government pension fund lost 4.9%, or 273 billion kroner ($39 billion), in the third quarter of the year. That came on top of losses of about $8.8 billion in the previous quarter.
“The negative return on equity investments was driven by the slowdown in the global economy and the decline in global equity markets, especially the Chinese market,” said Yngve Slyngstad, CEO of Norges Bank Investment Management, which oversees the fund.
