What will be the boj''s motivations to buy stocks

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Reference no: EM133125527

According to Nikkei News (APRIL 17, 2019), The Bank of Japan will overtake a state-run pension fund as the top shareholder in Tokyo-listed companies as early as 2020, Nikkei calculations show, as concerns rise regarding the central bank's outsize role in the nation's capital market. The BOJ held over 28 trillion yen ($250 billion) in exchange-traded funds as of the end of March -- 4.7% of the total market capitalization of the first section of the Tokyo Stock Exchange. Assuming that the bank maintains its current target of 6 trillion yen in new purchases a year, its holdings would expand to about 40 trillion yen by the end of November 2020. This would place it above the Government Pension Investment Fund's TSE first-section holdings of more than 6%. The BOJ has likely also become the top shareholder in 23 companies, including Nidec, Fanuc and Omron, through its ETF holdings. It was among the top 10 for 49.7% of all Tokyo-listed enterprises at the end of March. 10 points for each question.

Question a: What will be the BOJ's motivations to buy stocks?

Question b: How BOJ's action to buy stocks will be reflected on its balance sheet?

Question c: Do you think this policy can be emulated by China? What about the U.S.?

Reference no: EM133125527

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