TOKYO -- The Bank of Japan has begun selling equities it bought from commercial banks in the previous decade to ease anxiety over the financial sector, offsetting these divestments with extra purchases of exchange-traded funds.
The book value of these BOJ-owned shares fell 16.2 billion yen ($149 million) last month, account balances published every 10 days show. The central bank plans over the next 10 years to divest the entire lot, which had a book value of slightly more than 1.3 trillion yen at the end of April.
The equities were purchased in two rounds from commercial banks in doubtful financial health to reduce their exposure to the stock market, first in 2002-04 and again in 2009-10. The BOJ ended this policy in April 2010 but held on to the stocks for fear of precipitating a broader sell-off.
The chunk sold last month appears to have had a market value of around 30 billion yen.
To try to neutralize the impact of this selling on the stock market, the BOJ has increased its annual domestic-stock ETF purchases by 300 billion yen. The additional buying, spread out in increments of 1.2 billion yen per trading day, totaled 22.8 billion yen in April.
From May onward, the central bank will expand ETF buying to funds targeting companies that invest enthusiastically in their operations and employees. The bank's mainstay ETF tracks the JPX-Nikkei Index 400, which is designed partly to promote the efficient use of capital.
The BOJ will continue to buy 3 trillion yen of ETFs a year as part of its monetary easing policy.