Popular Tags


How central banks have become the main profiteers

Initially, the idea of interventions by central banks in the equity markets was seen as temporary measures

However, over time, it has gone too far.

One gets the feeling that the Central Banks simply cannot stop, and, perhaps, there is no way back.


One of the main buyers of shares is the Swiss National Bank. Over the past three months, which ended in September, the stock assets on the balance sheet increased by 1%. At the end of June parameter made $ 61.8 billion, and the end of September reached $ 62.4 billion. This information was provided by Bloomberg, based on the statistics of the Securities and Exchange Commission.

Now the Swiss National Bank has a share in 2.5 thousand companies registered in the United States. The largest of them are Apple Inc., Microsoft Corp. and Exxon Mobil Corp.


Even more interesting is the situation with the Bank of Japan. Central Bank has already become the largest shareholder in its market, which, incidentally, is the third largest in the world. Now the Bank of Japan is one of the largest holders of shares of 81 companies from the Nikkei 225 index, and by the end of next year seems to become the main shareholder in 55 of them. Let us remind: the head of the Bank of Japan Haruhiko Kuroda in October almost doubled forecast for the purchase of regulator of different ETF.

Yes, the Japanese Central Bank does not buy stocks directly, but does so by buying ETF traded funds, but this, in fact, doesn’t make any difference. The Bank of Japan is already competing with the major traders and investors, who are also called ‘whales.’ For example, in the Yamaha Corp. the regulator is the largest shareholder. Its share in the company through the ETF is estimated at 5.9%.

In total, the Bank of Japan at the end of June owned about 60% of local ETF. According to the report of the Association of Investment Trust Companies, this figure rose to 62% in July.

The most interesting thing is that even if educated economists oppose such intervention of the monetary authorities in the economy, the majority of citizens still support such measures, although their absurdity had actually been proved.

As for the Federal Reserve, Janet Yellen just recently gave a speech on this topic. She noted that in case of an economic downturn FRS could help boost economies through the purchase of corporate bonds and shares, but at the moment such a measure is not considered, in addition, it is prohibited by law. However, the laws have a tendency to change, and we have seen this clearly in the euro area and elsewhere. As they say, if only there would be political will.

To change the view, is possible to bring at least a few reasons. First, central banks' purchases of equity assets are working for a very narrow circle of people – the richest people, who are the holders of these shares.

And most importantly: if the state becomes the largest shareholder of the company, it is nothing but the nationalization – something that post-war Europe failed to do. People somehow think that these actions may have a positive impact, though in fact they are a huge threat.


  • November 15, 2016 5:54 PM MSK