The week ending December 21 saw the largest foreign outflow from Japanese stocks in three months, primarily due to expectations of a cautious pace of rate decreases by the U.S. Federal Reserve in the next year.
According to data from Japan’s Ministry of Finance, foreign investors pulled a net 1.02 trillion yen from Japanese stocks this week, marking their biggest weekly net sales since September 21.
As anticipated, the U.S. Federal Reserve lowered policy rates by a quarter point last week, indicating a cautious pace of reduction next year.
After a lower-than-expected U.S. inflation report stoked expectations for Fed rate reduction next year. The Nikkei index dropped by 1.95% last week but has subsequently risen by more than 1% this week. Additionally, the yen declined as the probability of a January rate
Compared to over 3.35 trillion yen in net purchases during the same period last year, foreigners have bought roughly 738.3 billion yen worth of Japanese stocks so far this year.
In the meantime, last week saw the largest foreign outflow of Japanese long-term bonds in three months, totaling a net 1.95 trillion yen. Additionally, foreigners sold short-term debt instruments worth a total of 2.96 trillion yen.
Japanese investors extended net purchases into a second consecutive week at the same time, purchasing a total of 181.5 billion yen worth of foreign stocks.
However, they reported their fourth weekly net sales in six weeks after selling off roughly 919.2 billion yen worth of long-term foreign bonds.
