Japanese funds boosted by QE programme

Japanese-yenJapanese equity funds have had eight weeks of net inflows driven by the country's quantitative easing programme, which includes direct purchases of domestic exchange-traded funds (ETFs).

The Bank of Japan surprised markets in February by increasing its quantitative easing programme by JPY 10 trillion (€100 billion), then added another JPY 5 trillion in April, bringing the total to JPY 70 trillion. By injecting money into the system, the country's central bank hopes to boost the economy, which has suffered after the earthquake and from reduced demand for Japanese goods in Europe. The strong yen has also put pressure on Japanese exporters.

The bank has said roughly 85% of the purchases will be of government bonds, with the rest aimed at corporate bonds and ETFs.

Japanese equity funds have absorbed $3.6 billion in net inflows since the beginning of the year, according to data from EPFR Global, including $1 billion in the week ending 6 June.

In contrast, Western European equity funds have had net outflows of about $15 billion since the beginning of the year.

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