While ECB President Mario Draghi faces his own German-bond-market constraints in his hubristic bond-buying-bonanza, cornering him to taper sooner than later; the Bank of Japan appears to have thrown every textbook out of the window and cranked their plunge-protection to '11', as Bloomberg reports, The Bank of Japan now holds 75% of the nation's ETFs.
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. While the Nikkei 225 Stock Average has risen 89% since December 2010, the BOJ’s dominance of the ETF market has raised concerns.
Fact - Cycle - Bank - Japan - Purchases
In fact, in a circular vicious cycle, the Bank of Japan’s purchases have helped assets managed by ETFs surge almost 10-fold since the end of 2010 to 25 trillion yen ($230 billion).
As the chart below shows, the central bank now owns three...
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