Japan's "Correction Protection Team" Rescue Stocks For Second Day

Tyler Durden's picture

A year ago, we noted that The Bank of Japan (BoJ) was a Top 10 holder in 90% of Japanese stocks. In December, we showed that BoJ was the biggest buyer of Japanese stocks in 2016. And now, as The FT reports, the real "whale" of the Japanese markets is stepping up its buying (up over 70% YoY) entering the market on down days more than half the time in the last four years.

Since the end of 2010, The FT notes that the BoJ has been buying exchange traded funds (ETFs) as part of its quantitative and qualitative easing programme. The biggest action began last July, when its annual acquisition target was doubled to ¥6tn. Since then, the whale designation has seemed pretty obvious: the central bank swallows a minimum of ¥1.2bn of ETFs every single trading day (tailored to support stocks that further “Abenomics” policies), and lumbers in with buying bursts of ¥72bn roughly once every three sessions.

Some traders say the bank’s supposedly targeted buying has cushioned the whole market. Last year, foreign investors were net sellers of ¥3tn of Japanese shares - a retreat that might have decimated benchmarks had the BoJ not swum in with ¥4.3tn of support via ETFs.

And so it was no big surprise that Kuroda and his pals were active once again this week. As Dennis Gartman notes, Jeff Uscher, in his daily commentary on the Japanese capital markets, sees the fingerprints (or footprints) of The Bank of Japan "Correction Protection Team" on the job.

For the second consecutive day on Thursday, buying ETFs worth ¥72.7 billion during the afternoon session. When the equity market opens weaker, traders are on the alert for possible BoJ buying. Websites aimed at retail investors have the probabilities of BoJ ETF buying operations worked out to a science.

 

The BoJ bases its ETF buying decision on the close of the TOPIX Index at the end of the morning session. If TOPIX finishes the morning down compared to the previous day’s close, the BoJ will consider taking action.

 

...both Wednesday morning and Thursday morning, TOPIX was down significantly on the day. On both days, TOPIX bottomed around 10:00 AM, when it had already become apparent that the BoJ would buy ETFs in the afternoon. Sure enough, in each case, the BoJ did come into the market taking day traders along for the ride.

 

 

According to StockGate, the BoJ has never failed to buy ETFs when TOPIX is down by more than 17 points at the end of the morning session. Equally, the BoJ has never bought ETFs when TOPIX is up.

Still the message is "get back to work Mr.Kuroda" as Japanese stocks suffered their biggest weekly loss in 5 weeks.

Of the 1,038 business days between April 2013 and March 2017 there were 449 sessions where the market was down: the BoJ bought on more than half of them. Whale or not, investors are now primed to think they are swimming with one.

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spastic_colon's picture

just change all the BOJ words to FED or ECB....and the words "Japanese" to US

Manthong's picture

 "Correction Protection Team"

Are those the guys I saw in the old documentaries with the white headbands and having a final Saki?

Haus-Targaryen's picture

What is the point of a market (intrinsic in that term is "price discovery") if true price discovery is prohibited from occurring?  I mean, seriously!? What in the actual fuck? 

It tells me this really is the end of the road.  They know they cannot let the markets fail or its full on economic doomsday. 

I've got my stack, my plan and my bug-out house.  Bring it. 

DavidC's picture

The fact that they're all at it in one way or another just shows how absolutely desperate they are. Pathetic.

DavidC

Mr 9x19's picture

"" What is the point of a market (intrinsic in that term is "price discovery") if true price discovery is prohibited from occurring?  I mean, seriously!? ""

 

welcome, to the real world. the only winning move is not to play.

 

the whole world  in front of your eyes is a fucking matrix, the only real world is those places without grid where honorable people live with the sunlight and  eat from they labor. all your desk jobs, burger flipsters 'n co are shit, pure junk with no significant sense nor meaning of life.

 

yogibear's picture

Their solution is to not allow failure, prop up everything at all costs.

GunnerySgtHartman's picture

And if anyone thinks the Fed wouldn't do the same thing, I have some prime real estate in the Sahara Desert for you ...

Ring_Of_Fire's picture

The end of this BS is near..

This is it's picture

Fuck all these national teams

small axe's picture

the central banks have decided that the "markets" still have some residual value as slave markets for debt-serf citizens

 

xrxs's picture

And it's a great way to transfer wealth to the 1%.

asteroids's picture

If you were a Bear looking to make the kill of the century.....

Stan522's picture

Wealth retention the old fashion way..... MANIPULATION!

Cordeezy's picture

The USA has a plunge protection team also. Correction protection sounds better though

www.escapeamazon.com

Offthebeach's picture

What is BOJ position on American graffiti art?  Seems prices aren't what they should be.  Graffiti art is too big to fail.

Dangerclose's picture

We've heard it before and too many times......"This will not end well!".........The hardest question to answer is when.

Cash Is King's picture

Actually it's spelled yuan errr I mean yen!

MrNoItAll's picture

Extend and pretend is the name of the game. They can't be stupid enough to think that this game can go on forever, or even for that much longer. So the big question is, are they just trying to stretch the shit show out to some preordained point in time, perhaps one determined by a convergence of factors or maybe by a desired level of preparedness, or are they really determined to drive the global economy right over the cliff?

zzzz88's picture

i really do not understand the intention of all central banks---

if they just want to rig market, they should allow corrections, so they can rig it.

but now it seems they want/intend/conspire to allow the regular bomb gets bigger and bigger to a neuclear bomb, 

what do they really want to do?????

 

Nobody For President's picture

Extend and pretend the yen...

To the end.

yogibear's picture

It's the North Korean economic plan. The central banks own failed entities. Zombies are encouraged. Hence fail your large company and let the central banks own it.

zzzz88's picture

this answer makes sense,

the best way to slave/manage the public is to make them poor and suffer,

Dirtnapper's picture

If market forces can not be allowed to balance TOPIX because of unlimited currency printing, market forces will correct the currency in question.

TheSilentMajority's picture

Somebody needs to ask ol'yellen about BOJ and SNB and ECB meddling in USA "markets" at her next press conference.