After a decade-long purchase, the Bank of Japan has a 37 trillion yen stock index ETF, accounting for about 4% of the total market capitalization of the TOPIX3%γ
The BOJ's purchases did serve as a backstop, keeping the price-to-earnings ratio from fluctuating downward, but at the same time, it was also questioned in terms of hurting market efficiency and exiting.
**, banks, and even foreign capital don't seem to appreciate it, and their net ** of Japanese stocks continues to decline.
Direct access to the Bank of Japan is still non-mainstream, but when market expectations are seriously skewed, maintaining market stability has become a recognized policy responsibility.
This is more justified in both the foreign exchange market and the bond market, but it seems to be a matter of concern.
So, what kind of national team does the market need?
When it comes to buying ** for the national team, heaven and earth, there is no more sincere than Japan. From 2010 to 2020, the Bank of Japan quietly bought for ten years.
In the past ten years, ** banks and even foreign capital do not seem to appreciate it. Their Japanese stock net ** continues to fall, and only the Bank of Japan has become the "big brother on the list".
The BOJ's buying history began in 2010. The subprime mortgage crisis in the United States triggered a global financial tsunami, while Japan was particularly weak against the backdrop of a stronger yen. As a result, the Bank of Japan implemented a comprehensive monetary easing policy in October 2010, which opened the way for **ETF to buy and buy without hesitation.
The initial amount it planned to buy was smaller, capped at 450 billion yen, or about 36.9 billion yuan at the time.
However, due to the 2011 East Japan Boom and the European debt crisis, Japan's economy and inflation are still sluggish. The Nikkei regained about 1 year after a modest stabilization of 4 months and fell below its previous low.
In 2013Japan has accelerated the implementation of a series of economic stimulus policies, and one of the "three arrows" is the implementation of an extremely loose monetary policy. In April, the central bank increased its purchases of stock index ETFs under the framework of QQE. The annual purchase limit was raised to 1 trillion yen, and the purchase period was abolished.
With the economic bottoming up brought about by this easing policy, the Nikkei has started a bull market**Continued until August 2015, an increase of more than 50%.
In 2015Japan's economic growth rate has once again fallen to near zero growth, and inflation has turned negative again. In 2016, the Bank of Japan implemented a negative interest rate policy for the first time and capped the annual increase from 3The 3 trillion yen was sharply raised to 6 trillion yen.
Thereafter, the NikkeiStill after 8 months**, a decline of more than 20%, after inflation out of negative growth, it has started to rise again**.
From 2017 to 2018, as the BOJ's ETF purchase scale continued to grow, it has surpassed overseas investors and non-financial legal persons to become the most important net party of Japanese stocks.
In 2020After the outbreak of the new crown epidemic in February, Japanese stocks plunged 30%. The Bank of Japan announced that it would double the annual new balance limit of stock index ETFs to 12 trillion yenIn the same year, Japan's ** under the Bank of Japan's more than 7 trillion ** and the global ** resonance, a significant increase of more than 70%.
2021-2022: The Bank of Japan (BOJ) has contracted sharply in its pace of purchases, while Japan's post-pandemic recovery has lagged far behind. Japan **fell into a sideways**.
Until 2023, the Bank of Japan almost stopped buying. However, under the effect of economic inflation improving and Buffett's "endorsement", Japanese stocks have once again become the focus of the global market after more than 30 years of silence.
So far, after a decade of purchases, the Bank of Japan has a 37 trillion yen ETF (book value), accounting for about 4 percent of the total market capitalization of the Tokyo Stock Exchange at the end of 20233% and 57%γ
In terms of the ETF purchase mechanism, the Bank of Japan triggered the creation of the ETF by buying the ETF in the secondary market. When an ETF trades** over its net asset value and generates a premium, the primary market will issue new ETF shares to smooth out the premium, thus also forming a purchase of the ETF's underlying **.
Therefore, the advantage of the national team to support the capital market by purchasing ETFs is that it can save **many** operating costs.
According to research by Nomura Orient International, the Bank of Japan's purchase of ETFs has a significant role in supporting the bottom line.
After 2013, Japanese stocks entered a long-term ** channel. Although it cannot be said that this is mainly due to the purchases of the Bank of Japan. Because if you look at the dynamic price-to-earnings ratio and dynamic earnings per share of Japanese stocks since 2013,The dynamic price-to-earnings ratio of the Topix index has been stable at the midpoint of 15x for a long time, while earnings per share have continued to grow since 2013
However, the BOJ's largest net ETF to date occurred in 2016 and 2020 when Japanese stocks were sharply raisedBuying has played a role in supporting the bottom line, maintaining the P/E ratio without excessive downward fluctuations.
However, the criticism of the national team, especially the central bank, has never stopped.
There are three main points for the country to directly hold ** or ETF ***:Marketability, Effectiveness and Exit.
1. Damage to market efficiency: Former Bank of Japan Governor Masaaki ShirakawaIt is believed that the BOJ's direct purchase of ** will hurt the efficiency of the market because it will break the pricing mechanism of **, and the pricing of ** should be based on supply and demand. At the same time, because **indirectly holding the company** but not exercising shareholder rights, it may also weaken the governance level of listed companies.
2. Effectiveness of the policy:Previously, in January 2019, there was a dispute in China over the central bank's purchase of ** ETFs. CITIC analysts said that there are many ways for the central bank to support the real economy, such as RRR cuts, interest rate cuts, targeted support for agriculture, agriculture and small and micro enterprises. As far as the central bank buys **, from Japan's experience, the role of supporting the real economy is not obvious. In addition, as a policy-making institution, the central bank may have moral hazard when to buy **ETF, when to enter the market and when to exit. There is also injustice to the private sector that does not participate in ** investments.
3. The biggest problem facing the Bank of Japan in buying ETFs is undoubtedly exiting. The Bank of Japan holds ETFs with a book value of about 37 trillion yen, and an exit will bring huge risks to the market.
According to the Bank of Japan's estimates, in order not to cause large fluctuations in assets**, if the scale of 300 billion yen per year is gradually sold off. If it goes well, it will take about 170 years to clear the entire inventory.
Shifting to other sectors, or increasing the number of young people in Japan, would also pose financial and structural problemsγAt present, the exit of the Bank of Japan ETF, like the exit of government bonds, is almost incomprehensible.
Therefore, from the perspective of the more common national team rescue method, it is generally adopted:The first is represented by Europe and the United States, through the expansion of pension and other market entities; Second, similar to South Korea and Hong Kong, China, they are stabilized by setting up leveling standards.
Although the Bank of Japan's direct entry into the market is still non-mainstream, it is undeniable that when market expectations are seriously deviated, it is a recognized policy responsibility to correct market expectations and maintain market stability.
This is more justified in both the foreign exchange market and the bond market, but it seems to be a matter of concern when it comes to **. So what kind of national team does the market need? We can learn some lessons from the BOJ's 10-year experience.
1. Timely, sufficient and all-round policies.
Judging from the Bank of Japan's 2010, 2013, 2016 and 2020** ETFs, they were all under the framework of a series of large-scale easing policies. Judging from the trend of Japanese stocks, ** and the economy are still the relationship between hair and skin. Without the combination of growth inflation and corporate earnings, it will be difficult to reverse the overall trend of bailouts, such as 2010 and 2016.
At the same time, as an economic barometer, it also reflects confidence in the economy. Only when the policies to boost the economy are enough to ensure that the economy achieves the recovery goal and enters the normal track, can it really play a role in correcting expectations.
2. The entry and exit of the national team should be transparent.
The BOJ's operation is to report in advance and make an announcement after the fact, and the whole process is transparent. This can greatly reduce moral hazard while optimizing the role of market expectation management.
Refer to the company's secondary market holdings to enter the market. What is the position and basis, to what extent is the market underestimated to buy, what is the total amount, what is the frequency, and the funds are coming. In the future, too, when it comes to quitting. What is the position and basis for exiting, to what extent is the market overvalued, and what is the amount. So as to achieve the effect of forming a rational return to the overly pessimistic and fanatical market.
3. Continuously improve market governance.
The reason why the national team is more concerned about ** is because in addition to harming market efficiency and market liquidity,Unlike the foreign exchange and bond markets, currencies and treasuries are traded that are relatively standardized and backed by national credit. **It is the companies that end up trading, and the differences between companies are greater and the transaction information is more opaque. In fact, this is the same risk for **, legal person and **. Therefore, it is necessary to optimize the listing rules, improve the quality of the company, increase the penalties for violations and protect investors, otherwise the national team may encounter the same "scallop" crisis as ordinary shareholders.
In addition to Buffett's "endorsement", the Japanese regulator's plan to improve the price-to-book ratio (PBR) to increase shareholder returns is also one of the important factors in enhancing investor confidence.
In March 2023, the Tokyo Stock Exchange required listed companies to carry out operations that pay attention to the cost of capital and stock price. A list of companies that announce their public initiatives on a monthly basis. Listed companies have boosted their stock price performance by expanding performance, buybacks, dividends, etc., which have boosted the company's stock price performance.
Visible,** The national team needed is not necessarily to turn the tide (and the Bank of Japan has not done it) or to buy the "big brother" like the Bank of Japan. Instead, it should be committed to helping the market return to normal functioning and gradually form a good investment and financing ecology.
There is a line in the hit drama "Flowers" that may impress investors even more, Po said to Li Li: Do you know what the economy urgently needs? Listing cannot become a capital game, it is necessary to have a real industry, become bigger and stronger through listing, and let the shareholders who hold the company share the fruits of the company's development.So it's still the same sentence, the economy and a good company after the big waves are the foundation of the first long bull.
Also, to add a digression, did the Bank of Japan make money buying stocks?
From the current point of view, it is naturally earned.
In the first quarter of last year, the Bank of Japan held ETFs with a book value of 37 trillion yen, and the fair value reached as much as 53 trillion yen137 trillion profit.
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