Bank of Japan shares' baffling surge comes to a halt

-- Mar 06
The Bank of Japan’s head-scratching surge this week came to a halt Friday, as the stock erased earlier gains to fall by its limit.

The shares sank 19%, the most since December 1991, after rising by the daily limit in each of the four previous sessions.

The volatile moves in the shares, or subscription certificates as the BOJ refers to them, has baffled market participants. While the BOJ is unusual in being a listed central bank, the stock pays a tiny dividend and holds no voting rights. In fact, the central bank doesn’t even hold shareholders’ meetings. The stock traded at an all-time low in January.

Usually little noticed or commented on, the central bank’s stock became a topic of conversation at the Diet on Friday, where BOJ Gov. Haruhiko Kuroda was delivering his semi-annual report on currency and monetary control.

"The Bank of Japan’s subscription certificates are completely different from the normal shares of listed companies,” Kuroda said in response to a question about the long-term decline in the stock price during his term prior to this week’s rally. Unlike a normal stock, he said, the share price doesn’t reflect profits or the state of its balance sheet. "The price is not the responsibility of the bank.”

Trading volume on Thursday rose to its highest on record, according to data compiled by Bloomberg, though the 11,600 shares exchanging hands was minuscule compared to most other listed companies in Tokyo. Volume on Friday stood at around 75% of that amount after less than 90 minutes of trading.