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TOKYO (Reuters) – Shares of the Bank of Japan (BOJ) hit their upper trading limit for a third session on Wednesday, in the latest example of how excess liquidity can lure retail investors into deals apparently irrational.
Shares of BOJ, one of the few central banks to have listed stocks, jumped more than 17% to 47,000 yen ($ 439.80) to reach their highest level since May 2018.
So far this week, central bank shares have jumped 68%, on par with volatile cryptocurrencies and some memes stocks sought after by U.S. retail investors.
The spiraling price has left professional stock analysts scratching their heads as they say there is no fundamental reason for this move.
The Japanese government owns 55% of the outstanding shares of BOJ, which are traded on the JASDAQ Small Business Exchange. The BOJ’s aim is not to make a profit, its shares are non-voting, to pay restricted dividends and the volumes are extremely low as they cannot be traded electronically.
“The BOJ’s stock movement is simply based on speculation. It moves in exactly the same way as bitcoin, ”said Koichi Kurose, chief strategist at Resona Asset Management.
“This means investors with abundant liquidity are looking for something new to invest, depending on the hot topic of the day. They buy BOJ shares due to the recent surge in the market. “
A BOJ spokesperson declined to comment on the stock price movements.
The rally in BOJ stocks comes just weeks before the central bank revises its monetary policy.
The central bank is generally expected to reduce its purchases of exchange-traded funds (ETFs), which some critics say have distorted prices in the stock market.
Japanese social media was abuzz with posts about Governor Haruhiko Kuroda’s revelation in January that the BOJ’s ETF holdings were likely reporting unrealized profits of around 12 trillion to 13 trillion yen due to a massive rally of Tokyo shares.
Japanese stocks have hit all-time highs since the asset bubble economy of the late 1980s, with the Nikkei index climbing back to 30,000 last month on expectations of a rapid economic rebound from the pandemic. coronavirus.
A stock analyst suggested that some investors might buy BOJ shares for the physical stock certificate in remembrance of the 2020s era of easy central money and soaring stocks.
The analyst, who declined to be named, said the current surge reminded him of when retail speculation pushed BOJ stock to an all-time high of 755,000 yen in 1988, and that sentiment is now as sparkling as it was decades ago.
“BOJ shares may have risen on its bullish earnings, but the bank’s business objective is not to post profits, its purpose is to stabilize BOJ ratings,” Hiroyuki tweeted Kubota, a financial analyst.
“We have to be careful that BOJ shares attract speculative money,” Kubota added.
Kurose de Resona has warned that a drop in BOJ shares could portend a market slowdown.
“After all, BOJ’s actions have no substance in them. Shareholders do not have the right to seek higher returns, ”he said.
(1 USD = 106.8700 yen)
Reporting by Junko Fujita; Editing by Vidya Ranganathan and Jacqueline Wong
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