Japan Central Bank's ETF Purchases Likely Below 1 Trillion Yen This Year, 'Lowest Since 2013'

Annual ETF Purchase Volume of the Bank of Japan (BOJ) [Image Source= Bloomberg]

[Asia Economy Reporter Park Byung-hee] Bloomberg reported on the 28th that the scale of domestic stock purchases made by the Bank of Japan (BOJ), Japan's central bank, using exchange-traded funds (ETFs) this year is expected to record the lowest level since 2012.

As of the 27th, the BOJ has confirmed ETF purchases amounting to 873.4 billion yen. Compared to last year, when it purchased 7.1 trillion yen to manage the turmoil caused by the COVID-19 pandemic, the purchase scale has significantly decreased.

With the stock market continuing its upward trend this year, it appears that the BOJ has reduced the scale of its ETF purchases. The Nikkei 225 index has risen about 6% this year and about 75% compared to the low point in March last year when the COVID-19 pandemic occurred.

Earlier in March this year, the BOJ stated that it would continue market intervention if stock market investment sentiment weakened but withdrew its annual ETF purchase target of 6 trillion yen.

The BOJ introduced quantitative easing policies in 2010 by purchasing government bonds, ETFs, and real estate investment trusts (REITs) to increase liquidity. After Governor Haruhiko Kuroda took office in March 2013, the scale of ETF purchases was significantly increased. This was a measure to overcome deflation and achieve the 2% inflation target. Since Governor Kuroda's inauguration, the average annual ETF purchase scale has approached 4 trillion yen.

The BOJ's cumulative ETF purchase scale has now increased to about 50 trillion yen, and in November last year, the BOJ surpassed Japan's public pension fund (GPIF) to become the largest institutional holder of Japanese stocks.

However, despite large-scale ETF purchases, the impact on prices remains limited. Japan's consumer price inflation rate in November recorded 0.6%. Although it has escaped the deflation phase, it still falls far short of the 2% monetary policy target.

This content was produced with the assistance of AI translation services.