Japanese Stocks See Biggest Weekly Foreign Outflow In Six Months

Japanese Stocks See Biggest Weekly Foreign Outflow In Six Months

According to a report, foreign investors withdrew over a trillion yen from Japanese stocks last week. This was due to several factors, including stocks going ex-dividend and speculation about currency market intervention by the Bank of Japan.

Data showed they offloaded a net 1.18 trillion yen worth of stocks, the largest weekly disposal since September 2023. Overseas investors also engaged in substantial selling of derivative contracts, totalling 967.32 billion yen, the highest in nine weeks, and withdrew approximately 213 million yen from cash equities. The Nikkei index fell 1.3%, following a significant rally the previous week.

Due to overcrowded long positions in significant companies, U.S. banks expressed concern about the possibility of a sell-off in Japan’s top-performing stocks.

However, there was an increase in foreign purchases of long-term Japanese bonds, amounting to 842.2 billion yen. Japanese short-term debt instruments witnessed substantial foreign outflows, totalling 2.78 trillion yen, the largest weekly sale since December 29.

Japanese investors sold a net 1.66 trillion yen of long-term foreign bonds, the highest in a week since October 2022, and withdrew approximately 25.1 billion yen of short-term debt securities. Additionally, they withdrew 233.6 billion yen from overseas equities, marking the fourth weekly net sale in five weeks.