BOJ Buys Japanese Stock ETFs in Rising Market for First Time

Japan’s central bank is in such a hurry to buy exchange-traded funds that it broke a four-year habit yesterday.

The Bank of Japan purchased 37.4 billion yen ($312 million) of ETFs, on a day when the Topix index rose at the trading break and the close. It’s the first time the BOJ has bought after stocks climbed in the morning, with all of the central bank’s other purchases coming on days the Topix fell, according to Tokai Tokyo Securities Co.

The BOJ started investing in ETFs in December 2010 as part of an asset-purchase program aimed at bolstering trading, and on Oct. 31 tripled the pace of its planned buying to 3 trillion yen a year. Yesterday’s change in strategy signals the BOJ is rushing to meet its target for 2014 as shares continue to rise, said Seiichi Suzuki, a market analyst at Tokai Tokyo.

“They have to acquire 3.8 trillion yen in ETFs by the end of the year, and the market has been strong, so if they kept imposing such conditions they might fail to reach their goal,” Suzuki said in a phone interview from Tokyo today. “They must be prioritizing meeting their target.”

The Topix soared 23 percent from an Oct. 17 low through yesterday, culminating in a seven-day stretch of advances. It gained less than 0.1 percent to 1,446.20 in the morning session yesterday. The measure fell 0.8 percent today.

As of yesterday, the BOJ had bought 3.7 trillion yen in ETFs, according to its own data. The central bank on Oct. 31 projected that it would have 3.8 trillion yen in the funds on its balance sheet by the end of 2014.

An official in the BOJ’s media department declined to comment.

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