Photographer: Akio Kon/Bloomberg

As Selloff Extends in Japan Stocks, One Prominent Buyer Is Back

The Bank of Japan is buying local stocks again after sitting out most of October and the first few days of November, which saw the benchmark Topix index close at the highest since 1991.

Data released late Tuesday show the central bank purchased equity exchange-traded funds in the last three trading sessions. The Topix opened lower on each of those days following the biggest one-day swing in a year on Thursday.

“The BOJ buys ETFs mechanically” and tends to put in buy orders after the Topix closes down in the morning session, said Norihiro Fujito, a senior strategist at Mitsubishi UFJ Morgan Stanley Securities Co. in Tokyo. “The central bank passed on buying ETFs in October simply because stocks continued to rise. In turn, it came in to buy in November just because the market is adjusting from the rally.”

The central bank has said it takes market conditions into account when making its purchases, started in 2010 as part of a stimulus package, but hasn’t provided more detail. It has spent 5 trillion yen on ETFs this year, compared with an annual target of about 6 trillion yen

— With assistance by Tom Redmond, and Isaac Aquino

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