Posted inAT+

How Japan nationalized its stock market

The concept of a creature dining on its own tail – suggesting a self-generated growth cycle – is a macabre one. So how about blowing it up to its logical limit: A whale eating its own tail?

In fact, this “whale of a tale” – excuse the puns – is exactly what is happening in Japanese financial circles.

The Bank of Japan recently became the nation’s top holder of stocks, owning more than US$430 billion’s worth. That means Japan’s monetary authority is now the nation’s investment “whale” – pulling the title away from its Government Pension Investment Fund, or GPIF.

It’s an awkward milestone with timely lessons for the wider world as it flirts with similar issues as the “Japanification” of the globe’s third-biggest economy.

Two years ago, the BOJ’s balance sheet surpassed the size of Japan’s $5 trillion economy amid governor Haruhiko Kuroda’s quest to end deflation.