BoJ speeds up ETF sell-off, cuts unwind timeline to 43 years
The Bank of Japan will sell its exchange-traded fund holdings faster, at a pace worth about 0.1% of market trading value, cutting the estimated time to clear its stock portfolio from 112 years to 43 years.
At the new pace, annual disposals would total roughly 860 billion yen ($5.45 billion) at book value. The revised plan takes effect in January 2027.
The central bank pointed to the rising market value of its ETF holdings, which has climbed alongside gains in Japanese equities, as the reason for stepping up disposals. Years of monetary easing left the BoJ holding one of the largest equity-linked balance sheets among major central banks.
Officials described the plan as a gradual, measured drawdown rather than a rapid liquidation, intended to limit disruption to stock prices, market liquidity and investor sentiment while still moving more decisively toward normalising the balance sheet.
This marks a shift from the BoJ’s previous approach, under which the sell-off was projected to stretch over more than a century. The shorter 43-year horizon signals the bank is accelerating its retreat from a policy tool built up during years of unconventional stimulus.
Why it matters for markets: A faster, ongoing reduction of BoJ equity holdings adds a steady source of supply to Japanese stocks, a factor the Nikkei 225 may watch given the scale of the central bank’s exposure. It also reinforces the broader narrative of BoJ policy normalisation, which can influence the yen and USD/JPY through shifting expectations for Japanese monetary policy.
Source: Economic Times Markets