Bank of Japan Is an Estimated Top 10 Holder in 90% of the Nikkei 225

This is ridiculous. It illustrates that most central banks’ primary mission has become asset price inflation (primarily the stock market) more than anything else. Pension funds, retirement savings, the top 1%’s majority of assets, and so on are all in the market so governments of the world have decided that the market shouldn’t go down, at least not very much.<p>So we are stuck at zero percent interest rates going negative. Give out the money to keep the party going. Any hiccup in the markets and banks cut rates. Our economies will continue to struggle with malinvestments until interest rates are in a more reasonable long-term range and all the zombie businesses can die and free up resources for stronger players. Amazing how supposed proponents of ‘free markets’ try to micromanage entire economies.

Meta comment &#x2F; rant about the bloomberg website.<p>What&#x27;s the matter with these web sites these days ?<p>When did everyone decide that good old <i>scrolling</i> is too old fashioned, so now the simple act of swiping the mouse to scroll down, results in totally surprising and confusing consequences - such as resizing and moving the video, pausing it if I scroll too much and then restarting it if I scroll back up..<p>Scrollbar position ? Ignore that - it tells you absolutely nothing - because there is the mega cool &quot;infinite scrolling&quot; feature ! Which by the way replaces current video with another one, which starts buffering and playback starts only later, when I&#x27;ve scrolled away or switched tabs..<p>And of course there&#x27;s the unscrollable, unremovable top header - a sort of screen real estate tax you have to pay for the &quot;bloomberg&quot; logo and .. Surprise ! A horizontal scrollbar showing the vertical position in current article !<p>What a mess ...<p>Sorry for the rant, but I&#x27;m sure I&#x27;m not alone in my &#x27;suffering&#x27; and this is a trend I&#x27;ve noticed on many websites, since they copy each other anyway...<p>&#x2F;Rant

The biggest issue with this is that it distorts the market in a way that normal quantitative easing doesn&#x27;t. Normally the stock market prices are kept in check with short sellers putting downward pressure on stocks that are priced too high.<p>With the government buying so much, being long only, it makes it very hard for a fund to short a stock. Its one thing to be right, but its another to try and short a stock knowing that you&#x27;ve got the government taking the other side of your trade. It doesn&#x27;t matter what fund you are, they have more firepower than you, which leads to decrease in short interest, which leads to an overall inflation in market values that goes away the moment the markets get any hint that the government will stop propping up prices.<p>Or put another way, the government is now in a position where they&#x27;ll need to keep on buying and holding the stock market forever.<p>Nothing about the Japanese stock market surprises me anymore.<p>Below is a good article illustrating how one leveraged ETF got so big that it was literally moving the market at the end of ht day in its attempt to re balance itself. Sort of a tail wagging the dog scenario.<p><a href="http:&#x2F;&#x2F;www.bloomberg.com&#x2F;news&#x2F;articles&#x2F;2015-10-18&#x2F;the-etf-whale-blamed-for-moving-japanese-markets-gets-reeled-in" rel="nofollow">http:&#x2F;&#x2F;www.bloomberg.com&#x2F;news&#x2F;articles&#x2F;2015-10-18&#x2F;the-etf-wh...</a><p>I guess the one good thing about Japan is that its essentially a petri dish for maco economists and macro funds to experiment with to determine what the US markets will look like if&#x2F;when the US hits an end to its economic growth.

I wonder if in the future we will look back on history and understand that what is happening with Japan is just a natural result of transitioning to a no-growth economy.<p>In the USA, everything is set up to require growth, or we get collapse. Except for family owned businesses that tend to take a long term view and also modern decentralized &#x27;limited profit&#x27; companies (even better if their charters use blockchain tech), all big business requires growth as does our government.<p>I know I am asking for a lot, but I would like to see a non-growth (or cyclical growth) mindset become the new normal. This would require new ideas about currency, the benefits of small local businesses over global businesses, etc.

What bothers me more than anything outside of the conflation of &quot;assets&quot; such as stocks and bonds as indicators of actual economic &quot;growth&quot; is that they are placing an inter-generational bet:<p>They are using money today which must be paid back tomorrow. The people who stand most to benefit are adults today. The people who stand most to lose are their children&#x27;s children.

We live in a world of extreme subjectiveness.<p>Cash flows are massaged and obfuscated. Dividends aren&#x27;t paid, we are asked to look, instead, at earnings yield, but not too closely. Non-GAAP earnings are treated as first class citizens. Companies borrow money against themselves to buy back their own stock, in a self-referential spiral. Meanwhile, governments shamelessly intervene in the markets, to keep the (increasingly subjective) prices high and the (objective) realized cash flow rate (dividends) low.<p>What is the value of any cash flow, with a 0% interest rate? With a negative one? What is truth?<p>These are the crazy days.

What&#x27;s the end-game here?<p>Obviously their sovereign debt level is enormous too, but it&#x27;s also mostly purchased by the Bank of Japan. It&#x27;s a ponzi scheme that&#x27;s contained within itself.<p>So it must mean Japan is heading toward a currency collapse, correct? They&#x27;re not going to default on their own debt since they own it all and can print whatever they need to keep it serviced.<p>It seems to me that the markets will one day wake up and decide that the yen is worthless...and that will cause ruckus.

This is the way Europe and the US are going too with quantitive easing it is just that Japan is a couple of decades ahead.<p>We need proper helicopter money (or a Modern Jubilee) going to the public to spend not to purchase assets at the benefit of existing asset holders.<p><a href="http:&#x2F;&#x2F;www.debtdeflation.com&#x2F;blogs&#x2F;manifesto&#x2F;" rel="nofollow">http:&#x2F;&#x2F;www.debtdeflation.com&#x2F;blogs&#x2F;manifesto&#x2F;</a> See - &quot;A Modern Jubilee&quot; (I&#x27;m not sure about the Jubilee Shares part though).

<i>At an estimated 8.6 trillion yen as of March, the BOJ’s holdings amount to about 1.6 percent of the total capitalization of all companies listed in Japan. That compares with about 5 percent held by the nation’s Government Pension Investment Fund. The central bank’s use of large-cap ETFs means its positions are concentrated, with less impact on the thousands of Japanese companies outside benchmark indexes.</i><p>Some additional context, from the article. This is not really a big deal. Unusual, but not crazy.

If nations want to nationalize their stock market it&#x27;s good monetary policy.<p>If nations want to nationalize healthcare it&#x27;s an improper manipulation of free markets.<p>Simplification of above statements: $good = &quot;logical monetary policy&quot;; $bad = &quot;pinkie commie manipulation of free markets&quot;;<p>if ($policy leads to higher prices for my portfolio) { $good } else { $bad }

Seems pretty sensible policy to me. The expected return on the stocks if probably something like 7%. The government can borrow at about 0%. Why not borrow and buy stocks? I would if I could borrow in that way. Also it helps the economy - win all round.

It&#x27;s almost working out as a very slow nationalization process -which is not what the Boj is looking for, so what&#x27;s the endgame if they do end up controlling sizable shares in companies? More or less of the concrete-industrial-retirement complex?

This shows the need for basic income. Now the central banks are geared toward giving money to the Have&#x27;s, the people owning assets, by popping up the asset price one way or the other.<p>Since the money need to be printed anyway, might as well give it directly to ALL of the people. At least the money will be spent to drive the economy. Printing money to pop up asset price just locks up the money in the asset and won&#x27;t be used.

This news follows the recent disclosure that the BOJ is already an owner of 52%+ of all Japanese ETFs (and wants to own more). [1]<p>The BoJ is not the only central bank doing such purchases -- the Swiss National Bank similarly owns over $100B in equities. [2]<p>In addition, central banks actively trade S&amp;P 500 futures on Globex. [3]<p>[1] <a href="http:&#x2F;&#x2F;asia.nikkei.com&#x2F;Markets&#x2F;Tokyo-Market&#x2F;BOJs-stock-portfolio-swells-to-10-trillion-yen" rel="nofollow">http:&#x2F;&#x2F;asia.nikkei.com&#x2F;Markets&#x2F;Tokyo-Market&#x2F;BOJs-stock-portf...</a><p>[2] <a href="http:&#x2F;&#x2F;www.streetinsider.com&#x2F;SEC+Filings&#x2F;Form+13F-HR+Swiss+National+Bank+For%3A+Dec+31&#x2F;11274927.html" rel="nofollow">http:&#x2F;&#x2F;www.streetinsider.com&#x2F;SEC+Filings&#x2F;Form+13F-HR+Swiss+N...</a><p>[3] <a href="https:&#x2F;&#x2F;www.cmegroup.com&#x2F;company&#x2F;membership&#x2F;files&#x2F;CBIPFAQ.pdf" rel="nofollow">https:&#x2F;&#x2F;www.cmegroup.com&#x2F;company&#x2F;membership&#x2F;files&#x2F;CBIPFAQ.pd...</a>

Central banks are very hesitant at being seen as a market maker, except in money markets.<p>The article mentions these are being held as ETFs. In addition, the future liabilities the central bank holds should be written-off against current assets vs. future tax income required to fund these liabilities.

It&#x27;s called socialism folks. Government ownership of the means of production. Full stop.

Let&#x27;s not write off this extreme form of QE if Japan can keep its quality of life high at the same time.

How is this economically distinct from broad ownership of passively-managed stock index funds?

the economic system of Japan is very different than in the US&#x2F;Europe, I find the east asian capitalism style preferable to what we have here.

Can we please update this wildly sensational title? BoJ is a top 10 holder in 90% of Nikkei 225 stocks. That is 90% of 226 stocks [1], or, 203 in total.<p>The article states this clearly before the opening paragraph.<p>1. <a href="https:&#x2F;&#x2F;en.wikipedia.org&#x2F;wiki&#x2F;Nikkei_225#Components" rel="nofollow">https:&#x2F;&#x2F;en.wikipedia.org&#x2F;wiki&#x2F;Nikkei_225#Components</a>

What&#x27;s up with titles on HN? Are you guys doing this on purpose?<p>&gt;the monetary authority’s exchange-traded fund purchases have made it a top 10 shareholder in about 90 percent of the Nikkei 225 Stock Average

SPOF