Bank of Japan seeks flexibility on $55bn ETF target in bull market
The Bank of Japan will consider changes to its approach to purchasing exchange-traded funds at its policy board meeting next week, a potentially significant move by the institution that has become the top holder of Japanese stocks.
As the risks of buying in an overheated market become more apparent, some at the central bank have proposed eliminating its 6 trillion yen ($55 billion) annual target in favor of an approach that allows for greater flexibility to adjust to market conditions.
The BOJ has already sharply scaled back ETF purchases this year. The year-to-date total stood at 350.7 billion yen as of Friday, a seven-year low and a 76% drop from the same period in 2020. If buying continues at the current pace, the annual total would come to about 1.8 trillion yen.
The size of individual purchases has also fallen to 50.1 billion yen per day. Over the same period last year, purchases were in the 70 billion yen to 100 billion yen range, even reaching 200 billion yen at times when the coronavirus outbreak roiled global markets.
The change reflects rising stock prices that have reduced the need for the BOJ to supply capital to the market. The bank bought ETFs on just one day in February, a month when the Nikkei Stock Average hit a 30-plus-year high in the 30,000 range.
In recent years, the BOJ had stepped in with purchases in the afternoon after morning sessions in which the Topix fell more than 0.5%. But this seemed to change last month, with the bank staying in wait-and-see mode even when this condition was met, though it did respond to larger drops.
When the central bank launched the ETF-buying program in December 2010 under then-Gov. Masaaki Shirakawa as part of its monetary easing program, it set an annual target of about 450 billion yen. The scheme has expanded gradually under Gov. Haruhiko Kuroda to its current pace of around 6 trillion yen per year, with a ceiling of 12 trillion yen.
News On Japan - Nov 25
Nissan Motor Corporation has announced plans to transition all its vehicles produced in the United Kingdom to electric vehicles (EVs).
News On Japan - Nov 24
The amount of undeclared income by wealthy people in Japan has reached a record high of 98 billion yen, among the worst offenders being scrap gold wholesalers, breeders and yakiniku restaurants, the National Tax Agency announced on Friday.
NHK - Nov 24
Japan's latest inflation figures show prices rose on a broad front in October. The month marked the first time in four months for inflation to accelerate.
NHK - Nov 24
Tokyo has a new landmark, a 330-meter-high skyscraper that opened on Friday. The Mori JP tower has 64 floors for shops, offices and residences. It's the tallest building in Japan, a title that previously belonged to the Abeno Harukas commercial and business tower in Osaka, western Japan.
Reuters - Nov 24
Japanese stocks witnessed massive foreign inflows in the week ended Nov. 17, underpinned by strong corporate earnings and as investors tempered some of their initial enthusiasm about the prospect of a series of U.S. interest rate cuts.
theceomagazine.com - Nov 24
Shitennō-ji temple is one of Osaka’s most important Buddhist temples. Built in the sixth century during the rule of Prince Shotoku, it has stood firm as the high-rises of the modern-day city have towered above it.
News On Japan - Nov 23
Danish pharmaceutical giant Novo Nordisk's anti-obesity drug "Wegovy" is now covered by Japan's public health insurance scheme. Doctor's, however, are concerned about the long-term effects of this highly addictive weight-loss treatment, and whether worldwide supply shortages will stop it getting into the hands of people who need it most.
carscoops.com - Nov 23
Toyota's Chairman and Master Driver Akio Toyota retires from his position as the chairman of the Japan Automobile Manufacturers Association (JAMA) which represents 5.5 million employees from 14 automakers. Toyoda is the only official who led Japan's automotive industry for three two-year terms, being appointed in 2012, 2018, and 2022.
acs.org - Nov 23
Japan’s three biggest chemical companies are seeing their earnings suffer from a slump in basic chemicals. All three experienced a sharp drop in profits in the first half of fiscal 2023, which ended Sept. 30, and one of them, Sumitomo Chemical, is forecasting a loss of $655 million for the full fiscal year.
newsonjapan.com - Nov 23
As the world leans into digital convenience, Japanese companies are not left behind in the digital transformation of payroll processing.
Reuters - Nov 22
Japanese chip materials maker Resonac (4004.T) said on Wednesday it will set up a research and development centre for advanced semiconductor packaging and materials in Silicon Valley.
News On Japan - Nov 22
Toshiba, aiming for corporate restructuring, held an extraordinary general meeting of shareholders on Wednesday, the final step towards delisting from the stock exchange.
Business Mirror - Nov 22
From manga artists to independent taxi drivers, Japanese freelancers and small businesses frustrated with the potential loss of a tax break are among the growing numbers pushing down Prime Minister Fumio Kishida’s approval rating to record lows.
ndtv.com - Nov 22
Tokyo offices are experiencing an unconventional approach to ease workplace stress. At a cost of 7,900 yen, roughly ₹ 4,400, people in Japan can access the services of Ikemeso Danshi, providing attractive companions referred to as "Handsome Weeping Boys."
News On Japan - Nov 21
Private companies are expected to exceed last year's winter bonuses for the third consecutive year, according to four private research firms, with an average payout per person rising between 2.1% to 2.5%.
News On Japan - Nov 20
The Azabudai Hills complex in Tokyo's Minato Ward, which includes Japan's tallest building, was unveiled to the media on Monday ahead of its opening on Nov 24.