Core Viewpoint - The article discusses the impact of the Bank of Japan's (BOJ) decision to sell Exchange-Traded Funds (ETFs) on the Japanese stock market, highlighting a significant rise in bank stocks and the Nikkei index, as well as potential corporate governance reforms resulting from reduced reliance on the central bank [1][3]. Group 1: Market Reactions - Following the BOJ's announcement on September 19 regarding the sale of ETFs, the Nikkei index initially dropped over 800 points but rebounded to a new high, gaining 447 points (1%) to reach 45,493 points by September 22 [1][3]. - Investors have resumed buying Japanese stocks despite the BOJ's ETF sales, with the Nikkei index recovering nearly 1,000 points from its low on September 19 [3]. Group 2: Corporate Governance Reforms - Analysts suggest that the BOJ's gradual exit from ETF purchases could enhance corporate governance in Japan, as companies may become less dependent on the central bank's support [1][5]. - The Tokyo Stock Exchange's PBR reform initiated in 2023 is prompting companies to accelerate the reduction of cross-shareholdings and stabilize their shareholder bases [5][6]. Group 3: Corporate Actions and Strategies - Companies like Omron and Mitsubishi Electric are actively considering structural reforms, including divesting underperforming business units to improve return on equity (ROE) [5][6]. - Omron's stock rose by 7% following its announcement to consider divesting its struggling electronic components business [5]. - Mitsubishi Electric aims to increase its ROE from 8% in FY2024 to 10% by FY2027, with its stock price rising by 20% after the announcement [6]. Group 4: Market Sentiment and Future Outlook - The market is closely monitoring the BOJ's ETF sales as a potential catalyst for accelerating corporate governance reforms in Japan [6]. - UBS analysts predict that companies will increasingly focus on shareholder returns and business restructuring to enhance profitability in the wake of the PBR reforms [5][6].