Japanese Government Will Nearly Double its ETF Purchases

japanIn a welcome bit of news for Japanese ETF investors on Friday, the Bank of Japan (BoJ) said that it would almost double the growth rate of annual ETF purchases it makes.

This development comes amid mounting pressure for aggressive tactics to inject life into Japan’s tepid economy.

The BoJ pledged to purchase Japanese ETFs so that their holdings will rise at an annual pace of 6 trillion yen (US $56.7 billion), up from a prior level 3.3 trillion yen ($31.93 billion) previously. That’s a massive 78% increase in the annual growth rate.

Bank of Japan also said it would double the size of a new lending program that benefits local companies to $24 billion. The program offers U.S. dollars to Japanese companies in the hopes that they can grow their international operations.

The central bank left its equivalent of the federal funds rate unchanged at -0.1%. Japan took the historic step of cutting its rates into negative territory back in February, and many analysts had expected them to further ease rates in the latest meeting.

The BoJ said the moves were aimed at:

“preventing these uncertainties from leading to deterioration in business confidence and consumer sentiment as well as to ensure smooth funding in foreign currencies by Japanese firms and financial institutions.”

The iShares MSCI Japan ETF (NYSE:EWJ) rose $0.17 (+1.43%) to $12.02 per share in premarket trading Friday. The EWJ, which is the largest Japan-focused ETF with over $13 billion in assets, has fallen 2.23% since the start of 2016. Still, that’s much better than Japan’s benchmark Nikkei 225 index, which has slumped more than 13% year-to-date.


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