Analysis-BOJ signals final phase of Ueda's stimulus unwind - selling ETFs

Core Viewpoint - The Bank of Japan (BOJ) is preparing to gradually sell its substantial holdings of exchange-traded funds (ETFs) as part of a strategy to unwind its massive monetary stimulus program initiated over a decade ago [1][2][3] Group 1: BOJ's Strategy and Holdings - The BOJ's plan to sell ETFs is a significant step in reducing its balance sheet, which has ballooned to 125% of Japan's GDP, the largest among major central banks [2] - The BOJ currently holds 37 trillion yen (approximately $251 billion) in ETFs, accumulated since 2010 to stimulate the economy [3] - The timing of the ETF sales remains uncertain, complicated by political factors, including the resignation of Prime Minister Shigeru Ishiba [1][3] Group 2: Communication and Signals - Deputy Governor Ryozo Himino has indicated that the BOJ is considering how to manage its ETF and real estate trust fund holdings, suggesting that a decision may be approaching [4] - The BOJ's communication has shifted, indicating progress towards selling ETFs, contrasting with Governor Ueda's previous statements about taking time to reach a decision [4][6] Group 3: Historical Context and Methodology - The BOJ plans to leverage its past experience in selling stocks acquired from banks between 2002 and 2010, suggesting a gradual approach to unloading ETFs rather than transferring them to government entities [5] - The previous stock sales, which took 20 years to complete, ended in July, allowing the BOJ to focus on its ETF holdings [6]