Foreigners Sold Japanese Stocks Ahead of Central Bank Meetings

Reuters

13:29 JST, December 19, 2024

Foreign investors divested Japanese stocks significantly in the week through Dec. 14, exercising caution ahead of policy meetings by the U.S. Federal Reserve and the Bank of Japan, and taking profits after a rally in the local market.

According to data from Japan’s Ministry of Finance, cross-border investors withdrew a net ¥587.6 billion ($3.79 billion) from Japanese stocks during the week after about ¥482.9 billion worth of net purchases in the previous week.

The Federal Reserve cut rates as expected on Wednesday but signaled a slower pace for future reductions, prompting a global equity sell-off on Thursday, including Japanese stocks, following Fed Chair Jerome Powell’s cautious remarks.

The Nikkei index has dropped about 1.93% this week, contrasting with its rise to a two-month high of 40,091.55 earlier in December.

In the second half of the year, foreigners sold approximately ¥4.24 trillion worth of Japanese shares, marking a significant shift from the ¥6 trillion in net purchases recorded in the first half.

Last week, foreigners continued their interest in Japanese long-term bonds, purchasing a net total of ¥382.6 billion for the third consecutive week. Conversely, they offloaded ¥1.71 trillion worth of short-term securities, halting a two-week streak of net purchases.

In parallel, Japanese investors bought a marginal ¥33.7 billion worth of Japanese stocks during the week following three successive weeks of net sales.

Meanwhile, they snapped up a net ¥706.1 billion worth of foreign long-term bonds, posting a second weekly inflow in five weeks.

$1 = ¥155.2200