Japanese stock ETFs face massive sell-offs, with a scale of up to $7 billion.
According to media reports, major Japanese ETFs tracking the Nikkei 225 Index and TOPIX Index will sell a large amount of related stocks on July 8th and July 10th.
It is reported that Japanese ETFs usually distribute dividends in July each year, so they often sell a large amount of holdings before the settlement date to raise funds, while buying an equivalent amount of futures contracts to ensure tracking accuracy.
According to estimates by Daiwa Securities, the assets sold by Japanese ETFs today and on Wednesday will reach 1.2 trillion yen (approximately $7.47 billion), while Nomura Securities expects the scale to reach as high as 1.3 trillion yen (approximately $80.9 billion).
Related data shows that securities sales related to ETF dividend payments are expected to increase by 8%, setting a new record.
Junichi Hashimoto, Chief Quantitative Analyst at Daiwa Securities, pointed out:
<blockquote>
&#34;As shareholder returns become more generous and stock prices rise, dividend payments by companies have been increasing, and ETF dividend payments have also been rising.&#34;
</blockquote>
However, some analysts point out that concentrated selling of ETFs may put pressure on stock prices to rise.
Yusuke Sakai, Senior Trader at T&amp;D Asset Management, believes that investors may remain on the sidelines, leading to no one picking up the stocks being sold:
<blockquote>
&#34;Investors may be reluctant to buy before the concentrated selling of ETFs.&#34;
</blockquote>
There are also views that the impact of this ETF sell-off is limited.
This view suggests that hedge funds and other institutional investors may short related futures in advance to hedge against the ETF sell-off. Therefore, when these investors buy back the futures they sold earlier, it may offset the impact of the ETF sell-off

Japanese ETFs usually distribute dividends in July each year, so they often sell a large amount of holdings before the settlement date to raise funds. This round of selling may reach as high as $7 billion

Just today and on Wednesday, the Japanese stock market is preparing to deal with "trillion yen massive sell-off"