BOJ’s outlook for Reit market in 2017 - FT

The Financial Times (FT) carrying an article on Wednesday, providing some thoughts as to what the Bank of Japan (BOJ) will be doing in the real estate investment trust (Reit) market in 2017.

Key Quotes:

“Some foresee the BoJ tapering into this, perhaps in the form of a raised target for long-term interest rates, or by letting 10-year JGB yields drift above zero per cent.” 

“The same soothsayers, dizzy at the thought that Japanese stocks may now have serious momentum of their own, wonder how closely the BoJ will stick to its ¥6tn-a-year, market-supportive target for purchasing exchange traded funds (ETFs).”

“It is a reasonable doubt: it is getting practically harder for the BoJ to meet that target and in July the market watched the weird spectacle of asset managers dreaming up ETFs that the general market did not want simply so the BoJ could buy them.”

Nomura’s Tomohiro Araki noted, “Enter the Reit market, where the BoJ sets itself (and met in 2016) a very modest annual purchasing target of ¥90bn. Given the restrictions on the credit ratings of individual Reits it can buy, the BoJ probably will not raise that target”