A large overhang that threatened the Japanese equity market is being removed with the Bank of Japan laying out a century-long plan to offload its massive holdings of exchange-traded funds.
While benchmark stock gauges fell Friday in a knee-jerk reaction when the central bank said it would be selling its ¥75 trillion ($507 billion) stockpile, traders quickly pared much of the decline as focus turned to the very gradual nature of the program. The BOJ intends to reduce its holdings by about ¥620 billion by market value per year.
The announcement also came at the end of a week that saw the blue-chip Nikkei 225 and broader Topix index set fresh record highs. The market’s resilience to shocks over the past two years underscores the confidence, with shares recovering first from the BOJ ending negative interest rates in 2024 and more recently rallying in the face of tariffs from the U.S.