A brokerage argued that the correlation between the performance of the Nikkei share index in the morning session and ETF buying in the afternoon had now “broken down” in what some call a stealth tapering.
Mizuho Securities also pointed out that a sell-off of the Topix small-cap index, which hit a year-to-date low this week, suggested that the BOJ was taking a more hands off approach – small-caps have been a large beneficiary of ETF buying from the central bank and are seen as a natural target in case the BOJ cuts back.
“It could be fair to say that the BoJ has started to quietly reduce its ETF purchases,” Nomura chief equity strategist Hisao Matsuura told the Financial Times, “although it is unlikely to say so”.
For more information on the Japanese markets, visit our Japan category.