Japanese investors remain big sellers of foreign bonds in March


A Japanese yen note is seen in this illustration photo taken June 1, 2017. REUTERS/Thomas White/Illustration/Files

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April 11 (Reuters) – Japanese investors were heavy sellers of foreign debt in March as foreign bond prices fell on inflation concerns and aggressive tightening measures by major central banks.

According to data from the Japanese Ministry of Finance, domestic investors sold 2.36 trillion net yen of foreign bonds last month, after selling 3.2 trillion net in February.

They also sold foreign stocks worth 455.7 billion yen, after buying them the previous month.

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“Foreign bond selling increased later in the month, indicating that they were more worried about a hawkish Federal Reserve pivot around the FOMC,” said Naka Matsuzawa, chief macroeconomic strategist for the Japan at Nomura.

The big sell-offs from local investors come despite a sharp drop in the Japanese yen last month.

Japanese investments in overseas assets

“The yen crashed in March, just as local investors were bringing home almost unprecedented capital,” Adam Cole, chief currency strategist at RBC Capital Markets, said in a note.

He added that many of the bonds sold were likely held on a currency-hedged basis, which implies limited currency flow and reflects the low cost of hedging across all G10 markets over the past two years.

Cumulative sales of foreign bonds and stocks in the first quarter of this year amounted to 5.28 trillion yen, the largest net sale in eight years.

The Bank of Japan (BoJ), at its monetary policy meeting in March, maintained its massive stimulus measures amid uncertainty over the global outlook, reinforcing expectations that it would remain an outlier in the global turn. towards stricter monetary parameters. Read more

Bank of Japan data showed that Japanese investors sold US bonds and stocks worth 3.11 trillion yen and 127 billion yen, respectively, in the first two months of this year.

However, they bought 1.16 trillion in European bonds over the same period and sold 232 billion yen in European equities.

Japanese investors also unloaded 294.69 billion yen in Chinese bonds and 25.26 billion yen in stocks, data through February showed.

Japanese investments in US and European assets

($1 = 124.9900 yen)

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Reporting by Gaurav Dogra and Patturaja Murugaboopathy in Bengaluru; Editing by Amy Caren Daniel

Our standards: The Thomson Reuters Trust Principles.


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