This startling statistic came from public research published in an April Bloomberg article by Yuji Nakamura, Anna Kitanaka and Nao Sano. BLK and Vanguard Group. This could be considered a nationalization of the Japanese stock market, except that the BOJ technically earned independence from the Japanese government in Modeled after the U.

Federal Reserve system, the BOJ is a public-private chartered organization with a state-protected monopoly over the money supply.

Stock prices are supposed to reflect the underlying value of a company. To be priced correctly, equities should reflect earnings and other fundamental characteristics , not the whims of central bankers. Any unexpected policy moves could send the market haywire. On April 5, , BOJ Governor Haruhiko Kuroda announced an ambitious bond and stock purchase program.

Stock Price - Bank of Japan Stock Quote (Japan: Tokyo) - MarketWatch

As Nakamura, Kitanaka and Sano point out, the BOJ is not the first or only government agency to buy stocks of private companies. Treasury Department and the Hong Kong government previously purchased distressed assets to prop up valuations and capitalize major companies after the Great Recession.

The Japanese case is only different because of its unprecedented magnitude and relatively open-ended commitment.

It also leaves Japanese investors in a precarious situation because the BOJ is now the dominant presence in the Nikkei. Unlike other investors, the BOJ is not looking to earn dividends or capital gains.

Instead, it only cares about preventing deflation. Mainstream macroeconomic policy, which consists mainly of large government deficits and very low interest rates, has failed to revive growth in Japan for more than 25 years. Now the BOJ is a major shareholder in at least of the companies within the Nikkei. The central bank is gobbling up so many stocks that Nakamura, Kitanaka and Sano dubbed it the Tokyo Whale, as "whale" is a common name for big money players in the stock market.

The Bank of Japan's Unstoppable Rise to Shareholder No. 1 - Bloomberg

The Tokyo Whale is expected to grow larger. Just a week before the Bloomberg article was published, analysts from Goldman Sachs predicted BOJ purchases of ETFs to climb to 7 trillion yen from 3. Reuters published an article entitled "BOJ Warming to Idea of Buying More Stock Funds: Sources" during the same week and predicted similar activity.

Through these policies, the BOJ risks creating a very big asset bubble. Market analysts would say the Nikkei is detached from the fundamentals, much like the American technology sector in the late s or the Japanese real estate market in the late s. More air may enter the bubble if the BOJ ramps up securities purchases. The BOJ may already find itself in an uncomfortable position. Even a relatively small sell-off could scare outside investors away from Japan, crushing valuations for Japanese firms.

If the BOJ sells most or all of its private security assets, a huge amount of yen could leave circulation. If the BOJ keeps on printing and buying, eventually nobody may want to hold yen for fear of deflation.

This is a tightrope act, and it is not clear whether the BOJ can make it to the other side. All the while, there should be less pressure to improve corporate governance among Japanese firms. After all, managers and directors can always run to the BOJ for more money. Dictionary Term Of The Day.

The Bank of Japan Was The Top Buyer Of Japanese Stocks In | Zero Hedge

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The Bank of Japan's Unstoppable Rise to Shareholder No. 1 - Bloomberg

Security Purchases as Monetary Policy On April 5, , BOJ Governor Haruhiko Kuroda announced an ambitious bond and stock purchase program. The Tokyo Whale Now the BOJ is a major shareholder in at least of the companies within the Nikkei.

There Is Probably an Asset Bubble Through these policies, the BOJ risks creating a very big asset bubble. Discover several reasons why investors may profit from short selling the Japanese yen against the U. The Japanese Yen possesses some unique qualities that traders should know before jumping in. Markets await Fed tightening this week after buoyant Feb jobs report. Learn about the Japanese markets, the challenges faced in and comparative analysis of the SPDR Small Cap Japan ETF and the iShares Japan ETF.

Learn the most common market and economic indicators used by market analysts to follow the Japanese stock market and Japanese In the forex market, currencies from all over the world can be traded at all times of the day. The forex market is very liquid, Learn how open market operations and monetary policy are related.

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