Japan Press Weekly

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2019 April 10 - 16 [ECONOMY]

BOJ buys ETFs in the same amount as sell-offs by foreign investors as way to bolster Japanese stock prices

It was recently revealed that the Bank of Japan in fiscal 2018 made investments in almost the same amount as overseas investors sold Japanese stocks, obviously for the purpose of bolstering Japanese stock prices.

The country's central bank, which has a mission to ensure monetary stability, now plays a role as Prime Minister Abe's policy tool to prop up stock prices. The currency-issuing bank itself is endangering its assets with the increased risk of undermining global trust in the yen.

According to the Tokyo Stock Exchange, selling of Japanese stocks by foreign investors in fiscal 2018 exceeded purchases by about 5.63 trillion yen, the largest net total sales since the BOJ embarked on its extraordinary monetary easing measures under the 2nd Abe regime.

In order to handle this situation, the BOJ in the same year bought exchange traded-funds (ETFs or baskets of big-name securities) worth 5.65 trillion yen, almost the same amount of net selling by foreigners. With the purchase of large companies' equities, the BOJ indirectly supported Japanese stock prices.

The BOJ buys ETFs valued at about six trillion yen a year. As of the end of March 2019, the market value of ETFs the BOJ possesses amounts to an estimated 28 trillion yen, accounting for nearly 5% of the total market value on the Tokyo Stock Exchange's 1st Section.

Past related article:
> Abenomics actually manipulation of stock market [October 19, 2017]