Japan's US$150b ETF binge seen slowing next year

Tokyo

AS STOCKS surge and consumer prices inch higher, investors say it's time for the Bank of Japan to reduce equity purchases that have been criticised for distorting the market.

Sometime next year, the BOJ will cut its annual buying target for domestic exchange-traded funds by as much as a third from the current 6 trillion yen (S$71 billion), says Toru Ibayashi, head of Japanese equities at UBS Wealth Management in Tokyo. Soichiro Monji of Daiwa SB Investments Ltd expects a similar reduction, but by the end of March.

"Four trillion yen," UBS's Ibayashi predicted. "And everybody will understand." Conditions have improved drastically since July last year, when the bank virtually doubled its ETF buying goal. Back then, investors were worried about another market downturn following Britain's vote to lea…