Cash Balance in Japan Hits New High Thanks to Central Bank

The U.S. Federal Reserve’s response was eventually going to have a parody effect on other global economies. After the Fed decided to backstop the corporate bond market, other central banks around the world have responded with their own infusion of cash—take Japan for example—its cash balance hit a new high thanks to the Bank of Japan.

According to a Reuters report, “the balance of money circulating in Japan’s economy reached $5 trillion in May, hitting a record high for the second straight month, as the central bank pumped more cash to cushion the blow to businesses and consumers from the coronavirus pandemic.”

“Armed with a raft of loan programs aimed at prodding commercial banks to boost lending to cash-strapped firms, the Bank of Japan is expected to keep expanding its balance sheet to ease the fallout from the health crisis, analysts say,” the report added.

“Japan’s economy will probably be in crisis-mode at least for the rest of this year. It would be very hard for the BOJ to slow the pace of money printing,” said Mari Iwashita, chief market economist at Daiwa Securities.

A few single country Japanese funds to consider:

  1. JPMorgan BetaBuilders Japan ETF (BBJP): seeks investment results that closely correspond to the performance of the Morningstar® Japan Target Market Exposure IndexSM. The underlying index is a free float-adjusted market capitalization weighted index which consists of stocks traded primarily on the Tokyo Stock Exchange or the Nagoya Stock Exchange. The fund may invest up to 20% of its assets in exchange-traded futures and forward foreign currency contracts to seek performance that corresponds to the underlying index.
  2. Franklin FTSE Japan ETF (FLJP): seeks to provide investment results that closely correspond, to the performance of the FTSE Japan RIC Capped Index. The FTSE Japan Capped Index is based on the FTSE Japan Index and is designed to measure the performance of Japanese large- and mid-capitalization stocks.
  3. Goldman Sachs ActiveBeta Japan Equity ETF (GSJY): seeks to provide investment results that closely correspond, before fees and expenses, to the performance of the Goldman Sachs ActiveBeta® Japan Equity Index. The fund seeks to achieve its investment objective by investing at least 80% of its assets (exclusive of collateral held from securities lending) in securities included in its underlying index, in depositary receipts representing securities included in its underlying index and in underlying stocks in respect of depositary receipts included in its underlying index. The index is designed to deliver exposure to equity securities of Japanese issuers.

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