Japanese stock ETFs face massive selling, with a scale of up to $7 billion.

According to media reports, major Japanese ETFs tracking the Nikkei 225 and TOPIX indices will sell a large amount of related stocks on July 8 and 10.

It is reported that Japanese ETFs usually distribute dividends in July each year, so they often sell a large number of holdings to raise funds before the settlement date, and at the same time buy an equal amount of futures contracts to ensure tracking accuracy.

According to Nomura Securities estimates, the assets sold by Japanese ETFs on Tuesday and Wednesday will reach 1.2 trillion yen (approximately 7.47 billion U.S. dollars), while Daiwa Securities expects the scale to be as high as 1.3 trillion yen (approximately 8.09 billion U.S. dollars).

Relevant data shows that securities sales related to ETF dividend payments are expected to grow by 8%, setting a new record.

Junichi Hashimoto, chief quantitative analyst at Daiwa Securities, pointed out:

"With richer shareholder reports and rising stock prices, the dividends paid by companies have been increasing, and the dividends paid by ETFs have also increased accordingly."

However, some analysts pointed out that the concentrated selling of ETFs may put pressure on stock prices to rise.

Yusuke Sakai, senior trader at T&D Asset Management, believes that investors may adopt a wait-and-see attitude, resulting in unsold stocks in the selling process:

"Before the concentrated selling of ETFs, investors may not want to buy.

There is also a view that the impact of this ETF selling is limited.

This view believes that hedge funds and other institutional investors may short relevant futures in advance to deal with ETF selling. Therefore, when these investors buy back the futures sold earlier, they may offset the impact of ETF selling.

As of today's close of the Japanese stock market, the Nikkei 225 index fell 0.32% to 40,780.7 points.

Edited by Jeffrey