Japan owns 77% of ETF's of Japan.

[Running_Man]

https://www.reuters.com/article/us-japan-economy-boj/kuroda-defends-japan-central-banks-etf-buying-sees-no-near-term-exit-idUSKBN1O602Q

I never realized the central bank of Japan was up to holding 77.5% of all Japanese ETF's. Considering that they have been about 20 years ahead of the US central bank, this could portend an amazing backstop for US securities for decades to come assuming this is the next step in Central Bank Policy around the world

 

[haha]

https://www.reuters.com/article/us-japan-economy-boj/kuroda-defends-japan-central-banks-etf-buying-sees-no-near-term-exit-idUSKBN1O602Q

I never realized the central bank of Japan was up to holding 77.5% of all Japanese ETF's. Considering that they have been about 20 years ahead of the US central bank, this could portend an amazing backstop for US securities for decades to come assuming this is the next step in Central Bank Policy around the world

Thank you for posting this. Reminds me of how some politicos are hyping the Modern Monetary Theory. Print all the money you can, as long as you can continue to pass this made-up money.

This is truly astonishing. An interesting thing to me is while this continues, gold either goes down or goes nowhere, and gold mining equities tend toward weakness.

To a guy who began his investing life in the 70s this is truly mind-blowing. This also destroys the basic premise underlying the efficient market hypothesis. If a meaningful portion of "demand" is created by made-up money, how meaningful can this demand be? Since many or most investors today do not actually do analysis, but rather trust the market opinion, one wonders how bright this trust could be.

Ha

 

[bjorn2bwild]

From another perspective, this represents about 3.8 percent of the Japanese stock market as of May 28, 2018 according to Nomura Holdings. The Reuters article is from December 6, 2018.
Still, it's alarming to strategist Nicholas Smith in the Bloomberg piece ----

The Bank of Japan, which aims to spend 6 trillion yen ($54 billion) a year on ETFs as part of its stimulus program, owned 3.8 percent of the Japanese stock market as of May 28, according to estimates by Nomura Holdings Inc

“I have always been bitterly critical of the BOJ buying of Nikkei ETFs,” Nicholas Smith, a strategist at CLSA Ltd. in Tokyo said in an interview. In the Nikkei 225, ranking is determined by the arbitrary measure of the price of one share, unlike most share indexes, where market capitalization is key. “Buying of it is hugely distortive.”

https://www.bloomberg.com/news/arti...ket-distortions-are-coming-under-new-scrutiny

 

[Running_Man]

From another perspective, this represents about 3.8 percent of the Japanese stock market as of May 28, 2018 according to Nomura Holdings. The Reuters article is from December 6, 2018.
Still, it's alarming to strategist Nicholas Smith in the Bloomberg piece ----






https://en.wikipedia.org/wiki/Tokyo_Stock_Exchange


https://www.bloomberg.com/news/arti...ket-distortions-are-coming-under-new-scrutiny

The Rueters article claimed Japan had already purchased 23 trillion yen of ETF's which is a value of about 204 billion of ETF's. Japanese stock market capitalization is about 4 trillion so that is a little over 5 percent of the stocks. Since this article was written latest estimates are 250 billion of purchases or about 6 percent of the total stock market capitalization. It is to me an amazing thing for a central bank to be doing. 6 percent of the US stock market would be two trillion dollars, the central bank also owns 42% of all bonds issued by Japan

 

[mpeirce]

Thank you for posting this. Reminds me of how some politicos are hyping the Modern Monetary Theory. Print all the money you can, as long as you can continue to pass this made-up money.

Sounds like a prescription for the mother of all crashes.

 

[Oz investor]

Thank you for posting this. Reminds me of how some politicos are hyping the Modern Monetary Theory. Print all the money you can, as long as you can continue to pass this made-up money.

This is truly astonishing. An interesting thing to me is while this continues, gold either goes down or goes nowhere, and gold mining equities tend toward weakness.

To a guy who began his investing life in the 70s this is truly mind-blowing. This also destroys the basic premise underlying the efficient market hypothesis. If a meaningful portion of "demand" is created by made-up money, how meaningful can this demand be? Since many or most investors today do not actually do analysis, but rather trust the market opinion, one wonders how bright this trust could be.

Ha

i remember another truism , about reverting to mean

but has the BoJ made the correct choice , by buying stocks ( via ETFs ) whilst the ECB has been buying corporate bonds

i guess time will tell

( i still believe in gold ... i just don't trust the government enough to share where i keep the precious metals )