Foreign Investors Pull ¥497B From Japan Stocks Amid Rate-Hike Speculation

Foreign investors turned net sellers of Japanese securities for the latest reporting week, unloading ¥496.8 billion ($3.4 billion) of equities and ¥106 billion of government bonds, according to Ministry of Finance figures released Thursday. The reversal follows net purchases of ¥1.16 trillion and ¥197.9 billion, respectively, in the previous week. The data also showed Japanese investors cutting exposure abroad, with outflows of ¥167.2 billion from overseas bonds and ¥306.1 billion from foreign equities. The broad pullback in cross-border flows comes as market participants increasingly price in the possibility that the Bank of Japan may lift short-term interest rates in the near term after keeping them near zero for years. Investors are now focused on Thursday’s auction of two-year Japanese government bonds for signals on demand at the front end of the curve. Separate statistics from the Japan Securities Dealers Association point to a longer-running shift: net foreign purchases of ultra-long JGBs shrank about 70% in July to ¥479.5 billion, underscoring waning overseas appetite as yields edge higher.