“…. Still, the longer the BOJ’s buying persists, the bigger the risk that market prices will detach from fundamentals. Assuming Goldman Sachs’s prediction for more stimulus proves correct, the central bank could end up owning a quarter of Mitsumi Electric Co., a supplier to Apple Inc., and 21 percent of Fast Retailing by the end of 2017, estimates compiled by Bloomberg show.
With such large stakes sitting in index-tracking ETFs that lack a mandate to scrutinize company performance, the BOJ’s intervention could also hamper attempts to improve Japan’s corporate governance, according to Nicholas Benes, representative director of the Board Director Training Institute of Japan.
“The reality of index ETFs is that their commissions are very low and they cannot spend much on engagement or analysis for proxy voting,” Benes said.
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The Board Director Training Institute (BDTI) is a “public interest” nonprofit in Japan dedicated to training about directorship, corporate governance, and related management techniques. It is certified by the Japanese government to conduct these activities as a regulated nonprofit.