BOJ Is Now A Top-10 Shareholder In 40% Of All Japanese Companies; Owns 42% Of All Government Bonds

The last time we looked at how much of the stock market the Bank of Japan controls, we found that as of September, Kuroda's central bank owned a stunning 75% of all Japanese ETFs as the central bank keeps buying stocks under its ultraloose monetary policy.

Since December 2010 - when The Bank of Japan held no ETFs at all - the central bank has been buying ETFs  (doubling its annual buying target to 6 trillion yen in July 2016) as part of unprecedented economic stimulus. Over this period, the Nikkei 225 Stock Average has risen 89% since December 2010. It is safe to say the two are correlated.

Fast forward to today, when according to the latest BOJ holdings update following even more ETF purchases, the Japanese central bank has also become a major shareholder in nearly 40% of listed companies. According to Nikkei calculations, the bank was one of the top 10 shareholders in 1,446 listed companies out of 3,735 at the end of March.

This means that just over the past year, when the BOJ was a major owner of 833 stocks, the BOJ's equity holdings have expanded by a staggering 70%. In addition, the Central Bank bank is now the top shareholder in Tokyo Dome, Sapporo Holdings, Unitika, Nippon Sheet Glass and Aeon.

This means that the BOJ has amassed an estimated 25 trillion yen ($227 billion) of equities as a result of purchasing exchange-traded funds. Putting these holdings in context, the BOJ holdings are equal to nearly 4% of the roughly 652 trillion yen aggregate market value of stocks traded on the first section of the Tokyo Stock Exchange.

In justifying the BOJ's relentless takeover of the stock market, Kuroda has said that buying up stocks is an integral part of the BOJ's strategy to lift inflation to 2%, a program which "has fulfilled its role to a certain extent," according to Kuroda. But, as the Nikkei adds, the size of the buying spree could complicate an eventual exit strategy from the monetary easing and also distort basic market mechanisms.

Some have said, half-jokingly, that there will never be an "exit", as the mere hint that the BOJ would taper, or worse sell, its ETF activity and holdings, would lead to a historic selloff as everyone rushes for the exits.

What about bonds? In the same update, the BOJ reported that it now also holds a record 41.8% of all Japanese bonds, an amount roughly equivalent to Japan's entire GDP.

Comments

Snaffew naegling Wed, 06/27/2018 - 21:19 Permalink

the US is guaranteed to be on par with them, the data will never be released to the common folk and if it is released, the numbers will be wildly distorted to hide the truth.  The fed has nationalized the stock market, or at least the FANG's and the NAS 100.  Shouldn't all citizens get a share of the dividends and profits?

In reply to by naegling

venturen Wed, 06/27/2018 - 20:34 Permalink

I guess they will declare war on someone once they are at 100%

 

How are they any different than our corrupt FED or the corrupt BOE. BOC or ECB?

Lie_Detector Wed, 06/27/2018 - 20:38 Permalink

And guess who owns the BOJ? The same ones who own most of the other CB's. They create fiat with a few keystrokes. They buy up real assets (for our good, haha) and have the nerve to say we OWE them that "money", plus interest. And when governments can't pay them back guess who keeps almost ALL the companies, real estate, etc. planet wide? They will lay claim to the planet and subjugate 7.5 billion people unless they are stopped. 

DonutBoy Wed, 06/27/2018 - 20:52 Permalink

The amazing thing about this is how well it's worked.  It's a simple sleight of hand beyond straight money-printing for government expenditures; a practice that has crushed every fiat currency in history.  Yet this conjurer's trick of issuing debt only to be bought with freshly conjured 1's and 0's from the central bank has not destroyed the yen, the euro, or the dollar.

I know how this ends, but I do not know when.  There are days when the JGB market is no-bid except for the BOJ.  That's an awfully clear indicator.  And yet the largest losses in my trading career have come from shorting the yen.  It's a mystery to me.

 

Balance-Sheet DonutBoy Wed, 06/27/2018 - 21:26 Permalink

Because it isn't straight printing of paper bills as in Austria and Germany. There is some long term asset that is less liquid and you swap that for immediately liquid cash. If the BOJ wanted it could sell the assets (shares) and cancel the cash. Germany literally ran real printing presses 24 hours a day and all those physical paper bills could not be withdrawn.

In reply to by DonutBoy

Balance-Sheet Wed, 06/27/2018 - 21:21 Permalink

This is the pattern for the future which Japan has simply reached sooner than the US and other countries due to changes in the global economy and demography in Japan. The BOJ swaps cash for securities of equal value in order to keep money circulating in the Japanese economy. Imagine that you owned a Gold or Silver mine in the USA in the 19th Century. Okay how do you pay your bills, suppliers, taxes? You sell the metal to the Federal Reserve and they issue you the dollars. It is a simple asset swap. The Japanese major corporations are assets in the same sense that Gold it. The BOJ swaps Yen for shares so the companies can pay their bills, employ people, and circulate money through the economy. You understand this, No, Yes?

Quivering Lip Wed, 06/27/2018 - 21:52 Permalink

I hope everyone is finally getting it. 

Centralized Confiscation and Consolidation through Counterfeiting.

Every new crisis will be met with even more consolidation.

Serfs up bitchez.

vladiki Wed, 06/27/2018 - 22:18 Permalink

The BOJ is making it so complicated.  Laborious, pissy intrusions into the markets year after year with official counterfeit, to make shareowners wealthy. Just mandate that every yen becomes 10.  So in one day everyone will be rich.  Brilliant!

Back to sanity.  These Krugmanite Central Bankers have lost their marbles, trying to create a perpetual motion machine that runs on fresh air.  Endless failure teaches them nothing. 

Let it Go Thu, 06/28/2018 - 06:33 Permalink

Japan is the poster child and living proof that low-interest rates do not guarantee economic growth and prosperity. The whole world is on a path that mirrors the same unsuccessful path taken by Japan since its bubble economy popped decades ago. It is a path that avoids real reform and bails out the very people that caused many of our problems.

The BOJ  is not only expanding their balance sheet but pumping up the market by jumping into the ETF market. All this has morphed into a program that seems to share a key focus on doing "whatever it takes" to keep the economy moving forward. The article below argues this is just another way to nationalize debt.

 http://Japans Economic Model  Leads Way In Nationalizing Debt.html