In order to prop up the national economy, spur inflation levels and ensure businesses stay afloat, the Bank of Japan (BOJ) has been purchasing immense quantities of shares in the world’s third-biggest equity market.
Earlier this year, it was reported that the BOJ is a shareholder in 90 percent of the Nikkei 225 Stock Average (SEE: Yikes! Bank of Japan is a shareholder in 90% of the Nikkei 225 Stock Average). Soon, the central bank will be the nation’s top shareholder.
Today, the Japanese central bank is a top-five owner of more than 80 companies on the nation’s Nikkei 225 Stock Average. By the end of next year, the BOJ will become the No. 1 shareholder in 55 private firms listed on the stock exchange, according to Bloomberg News.
Ostensibly, the BOJ’s stock holdings only rival that of piano maker Yamaha.
It should be noted that the BOJ doesn’t actually buy individual shares directly. Instead, it acquires its stakes through exchange-traded funds (ETFs).
BOJ Governor Haruhiko Kuroda, who recently doubled the central bank’s annual ETF buying target in July, believes this is the only way to restart Japan’s sluggish and stagnant economy. BOJ purchases more than $27.2 billion (3 trillion) of ETFs each year, and that number is set to spike to 7 trillion yen.
Japan is the only nation in the world where its central bank has that much stake in the stock market.
The world’s third-largest economy is in for some very interesting times. Not only is the central bank trying everything in its power to resuscitate the economy, the people have to deal with subzero interest rates, massive tax rates and slow economic growth.
Perhaps Prime Minister Shinzo Abe will soon quote “The Mikado”:
“I’m really very sorry for you all, but it’s an unjust world, and virtue is triumphant only in theatrical performances.”
Japan’s lost decade continues.
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