Bank Of Japan Plunge Protection Team Goes Into Overdrive, Buys Most ETFs Since 2010

Tyler Durden's picture

While the mainstream media has become used to the daily buying of bonds by The Fed, mention that they are buying 'stocks' and suddenly one is labeled a conspiracy theory wonk - despite 1) the fact that they are, and 2) they have admitted that equity wealth creation is a policy tool. However, ignoring the almost daily vertical ramps in US stocks and volatility from a seemingly bottomless pit of margin; the Bank of Japan has been buying stocks (directly through ETFs) for years... and as the Nikkei began to turn down in early August, the WSJ reports the BoJ undertook the longest and largest consecutive buying streak since it started purchasing ETFs in December 2010.



As WSJ reports,

While the central bank is well known for its massive purchases of Japanese government bonds as a part of its monetary easing program, it also buys ETFs—albeit in much smaller quantities—that track the Nikkei Stock Average and the broader Topix index.


Through a trustee, the central bank purchased a combined ¥92.4 billion ($904.2 million) in ETFs over the first six business days of August. That's the BOJ's longest and largest consecutive buying streak since it started purchasing ETFs in December 2010.


Many traders suspect that it may not be a coincidence that the central bank is scooping up ETFs at a time when both the Nikkei and the Topix are spending considerable amounts of time in negative territory. Speculation is rife that the BOJ is following an unwritten rule, called "the 1% rule" by traders, where it buys ETFs after the Topix index falls around 1% in the morning session.




"The current 'Abenomics' experiment could come tumbling down if political support erodes, so the collusive impact of both efforts is critical to keep the ship both afloat and on course," he added.

The only problem... it is not sustainable...

But some analysts are skeptical about how effective the BOJ's ETF purchases will be in the long term.


"The BOJ can only support the bottom, but stock valuations can only be raised by the values of each company," said Takahiro Sekido, a strategist at the Bank of Tokyo-Mitsubishi UFJ. He added sharp rises in domestic shares are unlikely unless investors are able to see improvements in business conditions in the years ahead.

*  *  *

Still think it's crazy talk that The Fed is actively buying stocks (selling vol) via its proxies?

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
yogibear's picture

Japan is the Federal Reserve's financial zombie. 

Just a matter of time before we see the Fed's grand printing experiment blow up.

Divided States of America's picture

No wonder the clean-up at Fukushima is getting no where...Abe has ordered all financial resources to prop up the NUKKEI index....which will probably implode soon when they have no more powder left.

Vampyroteuthis infernalis's picture

One day the BOJ will own every asset in Japan. How will that work out?

knukles's picture

Hey guys.... I got an idea.  How's about we set up a company (offshore), have no earnings, people, nothing... nada, zip, zilch, IPO it in Japan and ...  get rich.
There are buyers, kids!
BoJ will buy anything, it seems.  Janet?  Janet who?

pods's picture

Glad the Central Bank of Japan has all that surplus capital to put into the markets.

I wonder if Mr. Yellen's favorite song is "I'm turning Japanese."

(yeah, that works on multiple levels, sorry for that visual)


rum_runner's picture

That's a great question.. The "1% rule" is amazing.  The markets are literally forbidden from going down.  One has to imagine sooner or later the other market participants are going to get a bit sketched out but... then what?  If they sell, the BoJ buys.

These truly are interesting times.*

*Chinese curse.

froze25's picture

"One day the BOJ will own every asset in Japan. How will that work out?"

I would imagine with a revolution if the people over there haven't been completely feminized yet.

Seasmoke's picture

Fraud is everywhere.

LawsofPhysics's picture

And when fraud is the status quo, possession is 100% of the law.

dicksburnt's picture

Fraud is profitable!!  and profits in america is job one!!

Kreditanstalt's picture

...and these stock "purchases" will magically explode the money supply when the miniscule real market decides to SELL and those sales are converted into paper dollars...

Hmmm.   And where is the "buyer of last resort" going to come from when NFLX, Chipotle, and assorted other consumer garbage goes "no bid"?

Carpenter1's picture

Think this is a new thing in history? Hardly. Just the method is new. Desperate regimes often try to maintain control thru manipulation of the economy, money, or financial system.


Right now, people trade with them for profit. When diminishing marginal returns sets in, people will trade against them for profit. Then it becomes them against the world. The world that now owns all the worthless paper they printed previously, well armed to play their paper game.

Dr. Engali's picture

One day we'll wake up to find that the central planners own everything, and they will have bought it all with worthless digital fiat.

LawsofPhysics's picture

one day?  You remain the eternal optimist Doc.

knukles's picture

Seems like that's unnecessary because they already control everything, anyhow.
But appearances matter

At the feast of egos, all leave hungry

Sudden Debt's picture

Why don't they just confiscate and nationalise the stockmarket?


Today, I was amazed that Norway bought 50% of all public traded stocks on the Brussels stock exchange over the last few years.


might not sound much but remember that Brussels is important for Europe because a lot of companies worldwide have their headquarters over there.

Bioscale's picture

Where have you read this info?

IridiumRebel's picture

I sense a mid-afternoon ZH article.

NoDebt's picture

OK, so a little tough to sift through just relying on Google Translate, but I think I have the picture.

They invested ~$4B in roughly half of the companies listed on the exchange.  (Via Blackrock- it wouldn't be a good story without Blackrock being involved, obviously).

I don't think that means they own half the market cap of the entire exchange.

Cthonic's picture

3.4 billion euro across 57 Belgian companies, accounting for half [of the listings] of the Brussels exchange board...

NoDebt's picture

Wait, stop.  I need a link.  Something doesn't sound right.

manonfire666's picture

Newly minted vice chair from the Bank Of Israel openly bought equities as a central banker, not a huge leap. 


LawsofPhysics's picture

"When it becomes serious, you have to lie, and buy people's retirements plans with freshly printed paper promises" - LOP (with a hat tip to Jean-Claude)

spanish inquisition's picture

I think I may be on to something (or on something)... Full employment on the way, along with putting all that printed money to use. Everyone makes origami boats out of Yen (full employment), writes a promise on each one (please let me collect my pension) and launches it into the sea (faith that it will return with interest. Maybe 5%, but not 500,000%).

USD Long's picture

...and this is news because plunging deeply is just not a Japanese thing,

youngman's picture

It must be nice to be a player in the market where you can just print your own risk at all....what a messed up Market we have become..

101 years and counting's picture

its not a messed up market we've become.  its a messed global society.  utterly pathetic the most important thing for "Western" governments is to ramp stocks to give people "faith".  it will collapse.  and it will take decades to recover.

yogibear's picture

BOJ is remotely controlled by the US Federal Reserve.

El Vaquero's picture

If stocks continue to recover from the dip and the yields on the 10 year continue to decline, that's pretty good evidence that Fed is directly intervening in equities.  It will mean that QE itself is probably being tapered, but the Fed is doing other shit.  If stocks actually crash, the Fed is actually tapering.  You'll have to wait a week or three to see what these trends bear out, but if 10 year yields are highly correlated with stocks, the Fed is not intervening, if they are not correlated, the Fed is most likely intervening. If they have a strong negative correlation, I see no other explination except central bank intervention.

madbraz's picture

They are certainly doing something, it is no coincidence that we have reverse repos of $130 billion per day and every end of quarter it grows by $100 billion (last i checked it was something like $250 billion on June 30th), not to mention securities lending of $20 billion every day and God knows what else that they don't disclose because they don't have to...

madbraz's picture

You put 2 and 2 together and you realize that maybe HFT and algos running the show is not a coincidence, that they didn't appear out of nowhere and regulation let them slip through the cracks.   


Aren't HFT and algos the ultimate weapon in trying to manipulate (volumeless) markets?   Isn't that something that central banks ultimately desire, as long as you replace the word manipulate with "influence"... 

yogibear's picture

It gets real interesting once the BRICS dump the petrodollar in earnest.

Gradually the Federal Reserve is losing it's grip and right away things get expensive for Americans. With 70% of the economy being retail it's going to get noticeably tougher for people to make ends meet.

Smiley's picture

Don't worry, as we begin to re-arm Japan the inevitable conflict with China and North Korea will keep the cogs turning a little longer.

madbraz's picture

This has nothing to do with "Abenomics", "Dudleyomics" or "Draguiomics"...this is plain simple theft, corruption, lawlessness of using the financial authority of a country to prop up the self-interests of those on the top.


It's nauseating for anyone with a conscious who is not part of that minority of the minority and that is seeing the fabric of our country and the prospects of our children go down the toilet because of these financial Hitlers, who speak as if they were kings.  


They are thiefs, nothing else.

Itchy and Scratchy's picture

Well at least there's no chance of self dealing or corruption when these bankers scoop up futures.

sessinpo's picture

Maybe they will buy bitcon and save Bonestar. Bitcon down over 15% in the last week!

pakled's picture

More dogs eating their own doo doo....

yogibear's picture

A dying fraudulant economic system. Same as the US.

lasvegaspersona's picture

Does 'the Fed' mean the same as 'Exchange Stabilization Fund'?....thought so....