The BOJ keeps interest rates on hold, but is ETF selling expanding? How should we think about the impact on Japanese stocks?
[November 2 Morning Edition]
Good morning! 🍀
This is AI Stock Notes.
“The BOJ kept interest rates on hold, but are they strengthening their policy to sell stocks?”
“Does that mean Japanese stocks will fall today?”
You might have felt these questions after seeing the two decisions announced by the Bank of Japan on Friday, October 30.
In fact, these two are separate monetary policies.
Moreover, the change in the pace of ETF selling will not begin today, but in January 2027.
This time, I will use official Bank of Japan documents to organize the details of the decisions and their impact on the stock market.
I will also explain what you should check in today’s trading in a way that is easy for beginners to understand.
■ First, let’s check the recent market
[Japanese Stocks – Closing Price on Friday, October 30]
Nikkei Stock Average: 63,290.11 yen
Change from previous day: -1,369.36 yen (-2.12%)
TOPIX: 3,965.07
Change from previous day: -38.21 points (-0.95%)
[US Stocks – Closing Price on Friday, October 30]
NY Dow: $51,770.31 (-1.09%)
S&P 500: 7,580.07 (-1.82%)
Nasdaq Composite: 25,437.00 (-2.86%)
In the US, the decline in high-tech stocks was notable.
Reuters reported that concerns about the scale and profitability of AI-related investments have intensified following corporate earnings results.
However, the decline in US stocks does not necessarily translate directly into the same rate of decline for Japanese stocks.
[Foreign Exchange – As of 17:00 on October 30]
The dollar-yen exchange rate announced by the Bank of Japan was 157.55-56 yen per dollar.
This is a reference value for the Tokyo market on Friday. It is not the exchange rate at the start of trading today.
At the start of the week, it is necessary to check the latest exchange rates, stock indices, and corporate earnings in combination.
■ (1) The Bank of Japan kept the policy interest rate at around 1.25%
At the Monetary Policy Meeting on October 30, the Bank of Japan decided on a policy to encourage the uncollateralized overnight call rate to remain at around 1.25%.
The vote was 8 to 1 in favor.
The “uncollateralized call rate” is the interest rate at which financial institutions lend and borrow funds from each other over a short period.
The Bank of Japan influences the financial environment of the entire economy by guiding this short-term interest rate.
Generally, when interest rates rise, corporate borrowing costs increase, and the valuation of future profits converted to present value may change.
On the other hand, for banks and similar institutions, the difference between lending rates and funding rates affects earnings, so rising interest rates are not necessarily negative.
In other words, the impact of interest rate changes on stock prices varies depending on the industry and the financial condition of the company.
And this “holding steady” does not mean that future interest rate hikes have been ruled out.
■ (2) So, why is the pace of ETF selling being increased?
This is the important point for today.
ETFs are investment trusts that are managed to track stock indices and can be bought and sold on stock exchanges.
The Bank of Japan has purchased large quantities of ETFs as part of its past monetary easing policies.
The current selling policy is to gradually reduce those held assets.
Let’s check the figures released by the Bank of Japan on October 30.
[Annual ETF selling pace, book value basis]
Previous: Approximately 330 billion yen
After revision: Approximately 860 billion yen
Increase amount: approximately 530 billion yen
Multiplier: approximately 2.6 times
The “book value” referred to here is the amount based on the acquisition cost on the books.
It differs from the sale amount calculated at market price.
In BOJ documents, the annual sale amount after the review is estimated at approximately 2.46 trillion yen in market value terms.
However, this figure is a converted value based on certain assumptions, and the actual annual sale amount will not necessarily be that exact figure.
[Important]
The change in the pace of sales will be implemented from January 2027.
This is not an announcement that 860 billion yen will be sold all at once on November 2nd.
Furthermore, the BOJ has also indicated a policy that allows it to temporarily adjust or halt sales depending on market conditions.
It is not appropriate to judge that “today’s stock prices will fall because the BOJ is selling 860 billion yen” without understanding this difference.
■ 3. Are keeping interest rates on hold and expanding ETF sales contradictory?
At first glance, it might feel contradictory to keep interest rates on hold while increasing asset sales.
However, the roles of each policy are different.
The policy interest rate is intended to influence the financial environment through short-term interest rates.
On the other hand, ETF sales are a way for the BOJ to gradually dispose of the assets it holds.
Therefore, reviewing the pace of ETF sales while keeping interest rates on hold is compatible as a policy.
However, the impact of ETF sales on market supply and demand cannot be ignored.
Supply and demand refers to the balance between those who want to buy stocks and those who want to sell them.
An increase in sell orders can be a downward factor for stock prices, but actual price movements will change depending on the buying demand of other investors, corporate performance, the economy, and overseas markets.
Therefore, you cannot determine whether Japanese stocks will rise or fall based solely on this policy.
■ 4. Check the ‘announcement time’ for corporate earnings as well
There is one more thing to keep in mind when looking at Japanese stocks today.
That is the announcement time of corporate IR.
For example, Lasertec (6920), a semiconductor inspection equipment manufacturer, released its financial results for the first quarter of the fiscal year ending June 2027 at 3:45 PM on October 30.
[From the official financial results]
Net sales: 40.369 billion yen (down 25.5% year-on-year)
Operating profit: 15.769 billion yen (down 41.0% year-on-year)
Full-year operating profit forecast: 125 billion yen (up 18.8% year-on-year)
The company has maintained its full-year earnings forecast.
What is important here is that the financial results were announced after the cash stock market closed on October 30.
In other words, you cannot explain the stock price fluctuations in the cash market on October 30 as being caused solely by this earnings announcement.
Also, there are cases where quarterly earnings show a profit decline, but the full-year forecast shows a profit increase.
It is important to read the actual results, full-year forecasts, and future outlook separately, rather than deciding whether it is a ‘good earnings report’ or a ‘bad earnings report’ based on a single number.
■ 5. Three points to check today, November 2
[1: How the decline in US high-tech stocks will spread to Japanese stocks]
The Nasdaq Composite fell 2.86% on October 30.
For Japanese stocks at the start of the week, the price movements of semiconductor-related stocks will be a point of focus.
However, do not decide on trades based solely on the decline in overseas markets; check the actual price movements and trading volume after the market opens.
[2: The Bank of Japan’s policy and the market’s reaction to exchange rates]
Keeping the policy interest rate at around 1.25% and changing the pace of ETF selling are separate policies.
Let’s check the movements of interest rates, exchange rates, and bank stocks, and carefully consider which factors are being focused on.
The full text of the BOJ’s October Outlook Report is scheduled to be released on November 2nd at 2:00 PM.
By checking the content after it is released, we can add information that was not known in the morning.
[3: Corporate Earnings and Announcement Times]
When reading earnings reports, pay attention not only to sales and operating profit, but also to changes in full-year earnings forecasts and company explanations.
Furthermore, let’s also check whether the earnings announcement was made during trading hours or after the market closed.
This will be an important clue when considering the causal relationship between stock prices and news.
■ Pay attention to trading days this week as well
Regular cash equity trading is scheduled for Monday, November 2nd.
The cash equity market will be closed on Tuesday, November 3rd, for Culture Day.
Note that some derivatives, such as Nikkei 225 futures, have a holiday trading system, so they are not treated the same as cash equities.
In weeks with holidays, it is a good idea to check the trading schedule and corporate announcement plans.
■ Today’s Lesson
When reading news about monetary policy, it is important to separate ‘what was decided,’ ‘when it starts,’ and ‘how it could affect stock prices.’
Keeping interest rates on hold and expanding the pace of ETF selling are separate policies, even if they are announced at the same time.
Do not judge based only on the large numbers in the headlines; make it a habit to check the original BOJ text and the implementation timing.
■ What will we verify in the evening edition?
In tonight’s AI Stock Note 🍀 evening edition, we will check how Japanese stocks actually moved today.
We plan to compare the Nikkei 225, TOPIX, semiconductor-related stocks, exchange rates, and the additional materials released by the BOJ to look back at the points of interest from the morning edition.
How was the material we focused on in the morning actually received?
Through this process of checking our answers, let’s develop the ability to read the market together.
In yesterday’s morning paper, we learned about the differences in calculation methods between the Nikkei Stock Average and TOPIX.
Today, we took a step further from there to think about how to interpret monetary policy announcements.
If you are new here, please take a look at the self-introduction article pinned to my profile.
If you found today’s article helpful, I would be happy if you could support me with a ‘like’.
If you would like to continue learning about Japanese stocks together, please be sure to follow me.
Let’s keep learning together today as well!🍀
[Main Reference Materials]
・Bank of Japan, ‘On the Current Conduct of Monetary Policy’ (October 30, 2026)
https://www.boj.or.jp/mopo/mpmdeci/mpr_2026/k261030a.pdf
・Bank of Japan, ‘Decision on Reviewing the Pace of ETF Sales’ (October 30, 2026)
https://www.boj.or.jp/mopo/mpmdeci/mpr_2026/k261030c.pdf
・Nikkei Stock Average Profile (Daily Summary of the Nikkei Stock Average)
https://indexes.nikkei.co.jp/nkave/archives/summary
・Bank of Japan, ‘Foreign Exchange Market Conditions (October 30, 2026)’
https://www.boj.or.jp/statistics/market/forex/fxdaily/fxlist/fx261030.pdf
・Lasertec, ‘Financial Results for the First Quarter of the Fiscal Year Ending June 2027’
https://finance-frontend-pc-dist.west.edge.storage-yahoo.jp/disclosure/20261030/20261030560435.pdf
・Japan Exchange Group, ‘JPX Calendar’
https://www.jpx.co.jp/calendar/
*This article is based on publicly available information as of the early morning of November 2, 2026. It does not recommend the buying or selling of individual stocks.