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Japanese Stocks Plunge As Nikkei Takes Out 20,000, Falls Into Bear Market
First thing Monday morning, we mentioned that the yen's winning streak had extended to a seventh consecutive session, a development which is obviously not the best news for Japanese equities.
The Topix is of course in a bear market and on Tuesday, following the Christmas Eve massacre on Wall Street, the Nikkei dove 4% out of the gate to trade below 20,000 for the first time in some 15 months.
(Bloomberg)
The gauge is now 20% below its October highs, and although things could improve through
Kuroda get out there and hit the bid!
Is it possible (legal) for the BoJ to sell equity back to the issuing corporation privately, effectively retiring the shares?
Yes it is legal. Technically, the BoJ is buying ETFs from asset management companies. The central bank does not own the shares its buys through ETFs directly. If/when the BoJ sells, it will sell ETFs or ask the asset manager to unwind the ETF shares. Legally, it is the asset management company that will (likely) sell the underlying shares back to the issuer who will either hold them as treasury stock or cancel the shares. Most Japanese companies do not immediately cancel treasury stock but hold it on their books for a time and either resell the shares to the public or eventually cancel them. Good question, Captain.