Japanese Stocks See First Weekly Foreign Inflow in Five

REUTERS/Kim Kyung-Hoon/File Photo
Examples of Japanese yen banknotes are displayed at a factory of the National Printing Bureau producing Bank of Japan notes at a media event in Tokyo, Japan, November 21, 2022.

Foreign investors were net buyers of Japanese stocks last week after four consecutive weeks of selling, as U.S. bond yields declined from a one-month high, driven by softer economic data that hinted at potential Federal Reserve rate cuts this year.

They poured about 75.41 billion yen ($482.96 million) into Japanese stocks in the week ended May 31, data from stock exchanges showed.

Foreign investors primarily targeted derivatives last week, marking a second consecutive week of net buying with approximately 188.03 billion yen in contracts.

Meanwhile, the Japanese cash equities market continued to see net foreign outflows, totalling 112.62 billion yen.

A decline in U.S. bond yields supported risk assets last week. The yield on benchmark U.S. 10-year notes US10YT=RR has lost about 35 basis points since hitting a one-month high of 4.638% on May 29.

The Topix index rose 1.09% last week, thanks to a bounce from its 50-day exponential moving average during the week, while the Nikkei declined by 0.4%.

Foreigners, meanwhile, accumulated about 337.4 billion yen worth of long-term Japanese bonds, posting their third weekly net purchase in four.

They also acquired about 482 billion yen of short-term debt securities after 1.68 trillion yen worth of net selling in the prior week.

Japanese investors secured about 1.32 trillion yen worth of long-term overseas bonds in contrast to 310.4 billion yen worth of net withdrawals a week earlier.

They, however, sold about 130.2 billion yen worth of short-term overseas debt instruments.

Japanese investors, meanwhile, remained net sellers of foreign equities for the second successive week with about 588.7 billion yen worth of net disposals.

$1 = 156.1400 yen