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BK: The BoJ Owns 60% of all Japanese ETFs

By - - Market Sentiment on September 20, 2016 10:50 AM Follow-Ups BKInitial

The BoJ Owns 60% of all Japanese ETFs

While we all await the Bank of Japan’s comprehensive review, BK thought it might interesting to look at what options they really have. If they continue with QQE then they must continue to buy assets…but what’s left?

This chart from Deutsche Bank illustrates that the BoJ is running into a lack of supply.

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The BoJ currently owns 40% of all Japanese Debt securities and a whopping 60% of all ETFs outstanding. this means that an expansion of QQE has the potential to effectively nationalize the Japanese stock market. Just like in Europe it is likely that investors will hold onto assets that will be bought by the central bank in anticipation of higher prices. This means that the “free float” of Japanese ETFs is likely a lot less than 40%. For all intents and purposes the Japanese stock market may already be nationalized.

BK will let that sink in.

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Dan: Remember what you are celebrating – $SPX

By - - Market Sentiment on October 5, 2015 10:45 AM 1 Follow-Ups DanInitial Since Friday morning's September jobs data the S&P 500 futures are up about 3% (including this morning's 70 bps gains) as investors celebrate unexpectedly bad economic data. This morning, European equities are ripping (the Euro Stoxx 50 is up 3%) on weaker than expected PMI data: I want t... Read More →
This is Part of a 3 part Debate on Market Sentiment