The Bank of Japan’s first recorded impairment loss in real estate investment trusts has some market watchers concerned over the possibility of a larger hole from its far more sizeable purchases of exchange-traded funds.

In a little-noticed development at the time, the central bank booked a JPY15.9 billion ($205 million) impairment loss last fiscal year ended March 31 from its J-REIT investments. That followed a collapse in REIT shares at the height of the coronavirus pandemic, with the Tokyo Stock Exchange REIT Index losing half its value at one point.

While the write-down is purely a paper loss, and the bank still made a profit on its J-REIT holdings thanks to dividend returns, market watchers worry similar losses on its ETF holdings could impact the bank’s future asset purchases, as new calculations show the break-even point for its ETF purchases reached JPY20,000 for the first time.

To continue reading,

Sign in to access this Premium article.

Subscription entitlements:

Less than $9 per month
3 Simultaneous logins across all devices
Unlimited access to latest and premium articles
Bonus unlimited access to online articles and virtual newspaper on The Edge Malaysia (single login)

Stay updated with Singapore corporate news stories for FREE

Follow our Telegram | Facebook