BOJ buys stock ETFs as usual after policy change, but changes may lie ahead

FILE PHOTO: A man wearing a protective mask walks past the headquarters of Bank of Japan amid the coronavirus disease (COVID-19) outbreak in Tokyo, Japan, May 22, 2020.REUTERS/Kim Kyung-Hoon

By Hideyuki Sano

TOKYO (Reuters) - The Bank of Japan bought around 50 billion yen of Japanese stocks exchange traded funds (ETFs) on Monday, in line with previous operations despite the central bank last week dropping its commitment to spend six trillion yen a year on such purchases.

The BOJ said on Friday it would now buy ETFs “as needed”, up to a maximum of 12 trillion yen ($110.44 billion) a year.

Central bank data showed it bought 50.1 billion yen of ETFs on Monday, the same amount as on March 5 when it was last in the market.

Some analysts said it was too early to assess whether the central bank would shift the pace of its purchases, noting a real change may not come immediately.

The central bank appears to be sticking to its unwritten rule to buy ETFs on days when the Topix index falls 1% or more by midday.

The Topix fell 1.11% Monday morning as worries about automobile production due to a fire at a key semiconductor plant added to lingering worries about rising bond yields.

“The BOJ’s buying today gave markets some reassurance. The BOJ was probably afraid that it would get a stick for triggering a market crash if it had not bought ETFs today,” said Shingo Ide, chief strategist at NLI Research Institute.

“But the BOJ could slowly reduce its buying in the coming few months. We need to see.”

($1 = 108.6600 yen)

(Reporting by Hideyuki Sano; Editing by Toby Chopra, Kirsten Donovan)