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Equity Purchases by the Bank of Japan Reach a New Milestone

Published

1 month ago

December 21, 2020

Marcus Lu

Bank of Japan Equity Purchases

The Briefing

Domestic equities held by the Bank of Japan (BoJ) reached $434 billion in November 2020, the highest value ever recorded on its balance sheet
The BoJ began buying equity ETFs (exchange-traded funds) in 2010 to help stabilize its economy
The BoJ has now surpassed the country’s Government Pension Investment Fund as the largest owner of Japanese stocks

Equity Purchases by the Bank of Japan Reach a New Milestone

The Bank of Japan (BoJ) increased its equity holdings to $434 billion in November 2020, surpassing Japan’s Government Pension Investment Fund to become the country’s largest holder of domestic stocks.

This milestone will likely capture the attention of global policymakers, as the BoJ is the only central bank to purchase equities—a practice it first began in 2010. These purchases were intended to stabilize the Japanese economy after the 2008 financial crisis, but have carried on ever since.

Why Does the Bank of Japan Purchase Equities?

For decades, Japan has experienced a stubbornly low rate of economic growth relative to its peers. Despite the BoJ’s best efforts to boost growth, this trend has continued after the events of 2008.

Year	Japan (% GDP growth)	South Korea (% GDP growth)	U.S. (% GDP growth)
2010	4.2%	6.8%	2.6%
2011	-0.1%	3.7%	1.6%
2012	1.5%	2.4%	2.3%
2013	2.0%	3.2%	1.8%
2014	0.4%	3.2%	2.5%
2015	1.2%	2.8%	2.9%
2016	0.5%	2.9%	1.6%
2017	2.2%	3.2%	2.4%
2018	0.3%	2.9%	2.9%
2019	0.6%	2.0%	2.2%
Average	1.28% 🇯🇵	3.31% 🇰🇷	2.28% 🇺🇸

Source: World Bank

No stranger to unconventional policies, the BoJ believes its equity purchases will add a sense of security to the stock market, and as a result, encourage greater levels of investment. Since these purchases began, the Nikkei 225, an index tracking 225 large Japanese corporations, has generated a total return of roughly 160%.

A Drop in the Pond

While $434 billion in equities is by no means a small amount, it pales in comparison to the BoJ’s total assets of $6.7 trillion. This includes $5.1 trillion in Japanese government debt, and $59.4 billion in domestic corporate bonds.

These figures fall in line with other central banks including the U.S. Fed, which currently has $7.4 trillion in assets on its balance sheet. Whether the Fed will also begin purchasing equities, however, remains to be seen.

Where does this data come from?

Source: NLI Research Institute, 2020
Notes: Data as of Nov. 30, 2020.
Figures based on a conversion rate of 1 JPY = 0.0096 USD.

Related Topics:central bank equity economic growth bank of japan monetary policy asset purchases expansionary

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Datastream

The U.S. Share of the Global Economy Over Time

As of 2019, the U.S. made up almost a quarter of the global economy. This chart shows how the U.S. Share of the global GDP has changed over time.

Published

7 days ago

January 14, 2021

Govind Bhutada

The Briefing

The U.S. share of the global economy has nearly halved since 1960
America’s nominal GDP in current U.S. dollars is $21.4 trillion, or about 24% of the share of the global economy

The World’s Largest Economy

The U.S. is the world’s largest economy by nominal GDP, and its influence on the global economy is quite remarkable.

As of 2019, the U.S. made up almost a quarter of the global economy. But how has America’s share of the economic pie changed over time?

The U.S. Share of the Global Economy Over Time

While the U.S. economy has grown quickly over time, the global economy has grown quicker.

Since peaking at 40% in 1960, the U.S. share of the world economy has been cut almost in half, despite a rising national GDP and being the birthplace of some of the biggest companies on the planet.

Year	Global GDP	U.S. GDP	U.S. Share of Global Economy
1960	$1.37T	$0.53T	40%
1965	$1.97T	$0.74T	38%
1970	$2.96T	$1.07T	36%
1975	$5.92T	$1.69T	28%
1980	$11.23T	$2.86T	25%
1985	$12.79T	$4.34T	34%
1990	$22.63T	$5.96T	26%
1995	$30.89T	$7.64T	25%
2000	$33.62T	$10.25T	30%
2005	$47.53T	$13.04T	28%
2010	$66.13T	$14.99T	23%
2015	$75.22T	$18.23T	24%
2019	$87.80T	$21.43T	24%

The decline of America’s contribution to global GDP has been slow and uneven, with crests and troughs along the way.

Between 1965 and 1980, the country’s share fell by 13 percentage points, mainly due to stagflation of the 1970s. This decline was followed by Reaganomics and a period of strong recovery, which helped propel the U.S. share of the global economy back up to 34% by 1985.

The whipsawing would continue. Between 1985 and 1995, the U.S share fell by another 11 percentage points, only to bounce back to a local peak of 30% by the year 2000.

Downhill From Here?

Since the beginning of the 21st century, growth in many developing markets has continued at a rapid pace—and the U.S. share of the global economy has decreased as a result.

Until 2005, the U.S. still accounted for 28% of global GDP, but the Global Financial Crisis left a big dent, and its share fell to 23% by 2010. It has since remained relatively stable at 24%.

It’s important to put this decline into perspective. For instance, China’s share of the global economy grew from 4% in 1960 to 16.3% in 2019. Over that same time period, other countries like South Korea, Brazil, Mexico, Indonesia, and India also saw their emergence on the economic world stage, as well.

What the Future Holds

The COVID-19 pandemic has changed the course of the global economy, with most countries experiencing a recession in 2020. America’s economic position will depend on how quickly it can recover compared to the rest of the world.

Where does this data come from?

Source: The World Bank
Details: Data is in current U.S. dollars. Dollar figures for GDP are converted from domestic currencies using single year official exchange rates.

Datastream

America’s Most Responsible Companies in 2021

Which American companies are leading the way when it comes to corporate responsibility? Here’s a look at 2021’s most responsible companies.

Published

7 days ago

January 14, 2021

Carmen Ang

The Briefing

Overall, HP was rated the most responsible American company in 2021
When it came to environmental initiatives, Waters took the top spot. The biotech company has committed to reducing its emissions by 35% from its 2016 levels
General Motors received the top score in social responsibility—it’s the only major U.S. company with both a female CEO and CFO
In the corporate governance category, Qualcomm placed first. The company runs a number of education programs to help engage women and minorities in STEM related-fields

America’s Most Responsible Companies in 2021

Consumers are becoming increasingly more thoughtful about the brands they support and buy from. In the U.S. and UK, 68% of online consumers would or might stop buying from a brand with weak corporate responsibility practices.

Because of this, companies need to ensure their corporate social responsibility (CSR) initiatives are up to snuff in order to be competitive.

With this in mind, here’s a look at the top 20 most responsible companies in America, and what they’ve been doing to give back to their communities.

The Top 20 Most Responsible Companies

Newsweek and Statista used a four-step methodology to identify America’s most responsible companies. The process included a pre-screening, as well as in-depth CSR document review, and a consumer survey.

From there, companies were given a score out of 100 and ranked accordingly. With a score of 93.2, HP placed first as America’s most responsible company:

Rank	Company	Overall Score (out of 100)
1	HP	93.2
2	NVIDIA	92.7
3	Microsoft	91.9
4	Cisco Systems	91.7
5	Qualcomm	91.5
6	General Mills	91.3
7	Whirlpool	91.3
8	Illumina	90.9
9	Citigroup	89.5
10	Dell Technologies	89.4
11	Lam Research	88.8
12	General Motors	88.7
13	American Express	88.5
14	Nielsen	88.4
15	Mettler-Toledo International	88.3
16	MetLife	88.2
17	Merck & Co	88.1
18	International Flavors & Fragrances	88.0
19	Waters	87.7
20	Intel	87.4

In its 2019 Sustainable Impact Report, HP outlined how it’s been working to drive sustainability in three key areas—the planet, people, and community. And the company has made some impressive progress. For instance, in 2019 it used over 1 million pounds of ocean-bound plastic in its products.

It’s not a huge surprise that HP has taken the top spot on the list. The company is known for its innovation and progressive practices. In 2020, it was recognized as one of the top 20 most innovative organizations of the year.

Corporate Responsibility in a COVID World

The world’s continual struggle with COVID-19 has put an even larger emphasis on CSR, and the importance of supporting the community at large.

It’s no longer just the right thing to do. As consumer demand for transparency and corporate responsibility escalates, CSR practices are transitioning from a nice-to-have to a need-to-have. And organizations need to get on board before they’re left behind.

Where does this data come from?

Source: Newsweek and Statista
Notes: For more information on methodology, click here