Japan’s $500B+ ETF Unwind Strategy Aims for Market Calm
The Bank of Japan has charted a glacial course for unwinding its ¥83 trillion ($500B+) ETF portfolio, opting for annual sales of just ¥330 billion to avoid market disruption. This pace WOULD theoretically require over a century to complete—a deliberate strategy mirroring its decade-long bank stock divestment after the 2000s crisis.
Officials confirmed the plan during September's board meeting, emphasizing sensitivity to global market conditions. With ETF book values at ¥37.1 trillion against inflated market valuations, the central bank will halt sales during systemic shocks akin to 2008's collapse.
The Sumitomo Mitsui Trust Bank auction win underscores Japan's preference for controlled execution. Market participants note parallels to the 2010s' stealthy stock sales, which concluded without incident last July.
