Is This How The Bank Of Japan "Signals" It Is About To Boost QE?

As we have noted previously, The Bank of Japan (BoJ) is one of a handful of central banks that trade on global stock markets. The finance ministry holds a 55% stake of the Jasdaq-traded security, which as one analyst noted "seems like an odd investment." However, it appears BoJ shares serve a different purpose - to signal an imminent easing to the market. As Bloomberg reports, BoJ stock has surged almost 30% in the last few days on very heavy volume... the previous 4 times we saw spikes in price and volume, Japanese authorities eased significantly in the following days.

 

Signal? or Noise...

 

As Bloomberg reports, The BOJ has tended to rally around times when it eases monetary policy, according to Mitsubishi UFJ Morgan Stanley's Katushito Sasajima...

When the shares surged in March 2013, the megabanks gained the next month. Mitsubishi UFJ, the largest, jumped 19 percent, while Sumitomo Mitsui, the No. 2 by market value, soared 22 percent and Mizuho added 8 percent. The gains came as BOJ Governor Haruhiko Kuroda unleashed unprecedented stimulus.

 

Mitsubishi UFJ fell 2.8 percent through Wednesday from a high on March 18 this year. Sumitomo Mitsui lost 3.3 percent and Mizuho slid 4.7 percent. The BOJ rallied 18 percent in the period. “The BOJ stands out as the only riser in the bank sector,” Sasajima wrote.

 

“Megabank stocks could be worth watching for signs of repeating historical patterns.”

Which is interesting since IMF's Lagarde called for moar this morning...