The Bank of Japan Prunes Its Portfolio

The planned pace of selling is similar to the one used when the BoJ sold stocks it had accumulated between 2002 and 2010, in the aftermath of financial crisis of the late 1990s. That process spanned nine years and ended only recently in July 2025.

The BoJ Governor acknowledged that it could take more than a century to completely unwind these holdings. A faster process would risk igniting a broader sell-off, as the BoJ holds roughly 7% of the Japanese stock market via ETFs and about 5% of the J-REIT market. The BoJ's 2021 shift from Nikkei-linked ETFs to those tracking the Topix triggered a 6% drop in the Nikkei over the following four sessions.

As of mid-September 2025, the BoJ holds about ¥80 trillion worth of ETFs and J-REITs. At current prices, these holdings carry an unrealized profit of around ¥44 trillion. This places the BoJ at an advantage to other central banks, whose bond holdings are underwater.

While the pace of QT will be slow, the decision by the BoJ marks another step toward closing an extraordinary era of monetary policy. The BoJ broke new ground with its asset purchases, and we welcome the signal that desperate times are in the past.