TOKYO (Reuters) – Shares of the Bank of Japan (BOJ) reached a trading high for the third session on Wednesday, in the latest example of how excess liquidity can attract retailers to seemingly irrational stores.
Shares of BOJ, one of the few listed central banks, rose more than 17% to 47,000 yen ($ 439.80) to reach its highest level since May 2018.
So far this week, central bank shares have risen 68%, equating to exchangeable cryptocurrencies and select meme shares haunted by U.S. retail investors.
The price spiral has forced professional stock analysts to scratch their heads because they say there are no underlying reasons to justify the move.
The Japanese government owns 55% of BOJ shares traded on JASDAQ’s small business exchange. The goal of BOJ is not to make a profit, its shares do not have the right to vote, they pay limited dividends and the volume is extremely low because they cannot be traded electronically.
“The BOJ stock movement is based only on speculation. It moves in exactly the same way as bitcoin, ”said Koichi Kurose, chief strategist at Resona Asset Management.
“This means that investors with copious cash are hunting for something new to invest, based on the theme of the day. They are buying BOJ shares due to the recent strengthening of the market. “
A BOJ spokesman declined to comment on stock price movements.
The set of BOJ shares comes just weeks before the central bank reviews its monetary policy.
The central bank is expected to reduce the purchase of exchange traded assets (ETFs), which some critics say have distorted stock market prices.
Japanese social networks were flooded with announcements about the discovery of Governor Haruhik Kuroda in January that the funds of BOJ’s ETF probably made an unrealized profit of around 12-13 trillion yen due to the massive set of shares in Tokyo.
Japanese stocks rose to heights unseen by the bubble economy of the late 1980s, and the Nikkei index returned 30,000 marks last month to expectations for a quick economic recovery from the coronavirus pandemic.
A stock analyst has suggested that some investors may be buying BOJ shares for a physical stock certificate as a memento of the era of central bank easy money and 2020 stocks.
The analyst, who did not want to be named, said the current wave reminds him of when retail speculation pushed BOJ stocks to a record high of 755,000 yen in 1988, a feeling that is now as arrogant as it was decades ago.
“BOJ shares may have risen due to optimistic earnings, but the bank’s business goal is not to make a profit, but to stabilize BOJ’s notes,” tweeted Hiroyuki Kubota, a financial analyst.
“We have to be careful that BOJ shares attract speculative money,” Kubota added.
Resonin Kurose warned that the fall of BOJ shares could herald the fall of the market.
“After all, the actions of BOJ have no substance. Shareholders have no right to demand a higher return, “he said.
(1 USD = 106.8700 Yen)
Junk Fujita Report; Edited by Vidya Ranganathan and Jacqueline Wong