A report to be published this week by the OMFIF claims that because of record low interest rates, central banks have ...directly invested into the world’s stock markets – from the FT:
The report, seen by the Financial Times, identifies $29.1tn in market investments, including gold, held by 400 public sector institutions in 162 countries.
China’s State Administration of Foreign Exchange has become “the world’s largest public sector holder of equities”...
“...it appears that PBoC itself has been directly buying minority equity stakes in important European companies,”
In Europe, the Swiss and Danish central banks are among those investing in equities.
...Omfif quotes Thomas Jordan, SNB’s chairman, as saying: “We are now invested in large, mid- and small-cap stocks in developed markets worldwide.”
The Danish central bank’s equity portfolio was worth about $500m at the end of last year.
...The Bank of Japan (BOJ) has publicly led the way with its announcement in April this year, jumping straight into buying 60-70 trillion yen of stocks and ETFs each year, trying to incite inflation and a general recovery:
...this liquidity has spilled over into record bids for European bonds – yields now below that of US Treasuries – and indirectly into US shares:
Draghi’s policies have encouraged investors to bid up European assets from bonds to stocks and avoid cash. They’ve added $43 billion to European mutual and exchange-traded funds traded in the U.S. this year, according to EPFR Global data tracked by Bank of America Corp.
Meanwhile, they poured $3.3 billion into American equities funds."