Foreigners Turn Net Sellers of Japanese Stocks for 2024 on Concerns Over Yen Strength

Reuters

16:44 JST, September 27, 2024

Foreigners pulled out of Japanese stocks for a sixth successive week through Sept. 21 and turned net sellers for the year, due to lingering concerns over a stronger yen and increased caution ahead of the Bank of Japan’s monetary policy decision.

Overseas investors withdrew a massive 1.93 trillion yen ($13.27 billion) out of Japanese stocks during the week, marking their ninth week of net selling in 10, according to data from the Ministry of Finance.

With these notable outflows in the past weeks, foreigners have turned net sellers of about 1.11 trillion yen worth of Japanese stocks so far this year, even as they made net purchases of about 6 trillion yen in the first half of 2024.

Exchange data showed that foreigners withdrew about 512.28 billion yen out of Japanese cash equity markets during the week, extending net sales into a fifth week. They also sold derivative contracts of about 246.12 billion yen.

Although the yen JPY= hit a 14-month high of 139.56 against the dollar last week, it has since declined about 4% as the BOJ maintained rates steady and signaled no rush to raise borrowing costs further, leading analysts to anticipate increased foreign investment in Japanese equities in the coming weeks.

The Nikkei share average .N225 hit a two-month high of 39,297.59 on Friday, led by a surge in semiconductor-related shares and a rally in global stocks.

In the Japanese bond market, foreigners shed a net 2.01 trillion yen worth of local long-term debt during the week, their biggest weekly net disposal since March 23, and about 883.3 billion yen worth of short-term securities.

At the same time, Japanese investors bought long-term foreign bonds for seven out of eight weeks of about 774 billion yen, while acquiring a net 53.8 billion yen worth of short-term debt instruments.

They, however, ditched a net 427.9 billion yen worth of foreign equities, their biggest weekly net sales since July 6.

($1 = 145.4100 yen)