October 19, 2017
Stocks continue advancing on the Tokyo Stock Exchange. Prime Minister Abe Shinzo has boasted that this is thanks to his economic policies dubbed “Abenomics”. The current market situation, however, should be defined as the “government-controlled” market created by the use of public funds.
Under Abenomics, public money was injected in the domestic stock market through an investment of public pension funds by the Government Pension Investment Fund and the purchase of exchange-traded funds (ETF) by the Bank of Japan.
Akahata made calculations based on the GPIF’s financial report and the Tokyo Stock Price Index. According to the calculation, the GPIF currently holds 39 trillion-yen worth of shares in Japan. Meanwhile, the value of the BOJ’s ETF holdings is 21 trillion yen. The value of stocks held by the GPIF and BOJ amounts to 60 trillion yen, accounting for 9% of total market value.
Required by the Abe government, the GPIF in October 2014 increased its investment allocation for domestic stocks from the previous 12% to 25%, which doubled the amount of public money pumped into the market. Under Abenomics, BOJ has been buying ETFs in accordance with its “new dimension of monetary easing” policy. The central bank in July 2016 announced that it will expand its purchase of ETFs at an annual pace of 6 trillion yen. ETFs combine features of common stocks and mutual funds, and are traded on stock exchanges. Through the purchase of this financial product, BOJ indirectly holds corporate shares.
Abenomics has in essence contributed to generating stock market highs that benefited large corporations and the wealthy while further widening the gap between the “haves” and “have nots”.
Past related articles:
> Abe’s policy to have public pension fund buy more stocks causes huge loss [July 2, 2016]
> Abenomics takes big bite out of public pension funds [November 5, 2015]
Under Abenomics, public money was injected in the domestic stock market through an investment of public pension funds by the Government Pension Investment Fund and the purchase of exchange-traded funds (ETF) by the Bank of Japan.
Akahata made calculations based on the GPIF’s financial report and the Tokyo Stock Price Index. According to the calculation, the GPIF currently holds 39 trillion-yen worth of shares in Japan. Meanwhile, the value of the BOJ’s ETF holdings is 21 trillion yen. The value of stocks held by the GPIF and BOJ amounts to 60 trillion yen, accounting for 9% of total market value.
Required by the Abe government, the GPIF in October 2014 increased its investment allocation for domestic stocks from the previous 12% to 25%, which doubled the amount of public money pumped into the market. Under Abenomics, BOJ has been buying ETFs in accordance with its “new dimension of monetary easing” policy. The central bank in July 2016 announced that it will expand its purchase of ETFs at an annual pace of 6 trillion yen. ETFs combine features of common stocks and mutual funds, and are traded on stock exchanges. Through the purchase of this financial product, BOJ indirectly holds corporate shares.
Abenomics has in essence contributed to generating stock market highs that benefited large corporations and the wealthy while further widening the gap between the “haves” and “have nots”.
Past related articles:
> Abe’s policy to have public pension fund buy more stocks causes huge loss [July 2, 2016]
> Abenomics takes big bite out of public pension funds [November 5, 2015]
