The Strategist

Retail investors buy up Bank of Japan shares

03/02/2021 - 04:40

After GameStop and Nokia, retail investors chose a new, not the most obvious, target: they bought up shares in the Japanese central bank, giving it its biggest rise in 16 years. The Bank of Japan is one of the few publicly traded central banks, but its securities offer little advantage to holders, Bloomberg notes.

Retail investors appear to have chosen a new target after "run-up" stocks of gaming retailer GameStop, Nokia, AMC and others. As Bloomberg reports, this time they bought up shares in the Central Bank of Japan. 

As a result, the organization's securities, traded on the Tokyo Stock Exchange, soared 18 percent to 33,000 yen ($309) apiece on Monday. This is the maximum daily growth of the Japanese Central Bank's shares since 2005, the agency notes.

The Bank of Japan is one of the few central banks in the world whose shares are traded on the exchange, Bloomberg writes, citing the example of banks in Belgium, Greece and Switzerland. Most of the securities of the Japanese Central Bank (55%) belong to the state, individual investors own 40%.

In contrast to traditional shares of private and state organizations, shares of the Central Bank of Japan do not give holders the right to vote and offer very limited dividends, so they can hardly be called a useful asset, the agency notes. 

"The Bank of Japan shares should not be treated as conventional stocks - that's nonsense," Norihiro Fujito, chief investment strategist at Mitsubishi UFJ Morgan Stanley Securities, told Bloomberg. However, he said retail investors' interest in such an unusual asset may speak to their sentiment. Fujito said the Japanese stock market had recently risen to its 30-year high and Japanese investor sentiment was improving. 

"Retail investors don't care about dividends, they are only interested in profits. They will be finding [Bank of Japan shares] attractive as long as prices are rising and there are buyers for them," explained a senior market analyst at Matsui Securities.