Quantitative and Qualitative Easing Continues at BOJ, Japan ETF Market Share Rises Again to '63%'

[Photo by Reuters Yonhap News]

[Asia Economy Reporter Park Byung-hee] It has been confirmed that the market share of the Bank of Japan (BOJ), Japan's central bank, in the exchange-traded fund (ETF) market has risen again.

According to major foreign media citing financial market information firm ETFGI on the 17th, BOJ's market share in the Japanese ETF market was recorded at 63% as of July. BOJ's ETF market share reached an all-time high of 77% in 2017, dropped to 58% last year, but has risen again.

While major global banks such as the U.S. Federal Reserve (Fed) and the European Central Bank (ECB) have stopped asset purchases to curb inflation, BOJ continues its quantitative easing policy and steadily purchases ETFs.

BOJ has been purchasing ETFs linked to the Nikkei 225 index and others since December 2010, and since 2016, BOJ's ETF market share has consistently exceeded 50% by a wide margin.

BOJ's annual ETF purchase limit was originally 1 trillion yen but has steadily increased. Since 2020, the annual purchase limit has been maintained at 12 trillion yen.

Regarding BOJ's large-scale ETF purchases, Deborah Fur, founder of ETFGI, said, "It has played a role in increasing the credibility of ETFs not only in Japan but also in the global market," adding, "As the ETF market size grows, there is also an effect of reducing annual fees."

However, there are concerns that if BOJ begins to reduce its ETF holdings, it could cause a significant shock to the stock market.