Japanese investors buy foreign bonds as bets of BOJ hikes abate
Adds data on foreign sales activity in paragraph 10
Aug 29 (Reuters) -Japanese investors were net buyers of foreign bonds in the week to Aug. 24, capitalizing on relatively higher U.S. bond yields amid expectations that the Bank of Japan might take longer than initially expected to consider its next interest rate hike.
They invested a substantial 1.54 trillion yen ($10.65 billion) in long-term foreign bonds, marking a fourth consecutive week of net purchases. However, they sold short-term overseas debt securities for a second straight week, totalling approximately 109 billion yen on a net basis.
A rate hike by the BOJ earlier this month pushed the yen to an eight-month high, prompting investors to unwind their carry trades in favour of overseas bonds.
Although the yen has stabilized, it remains near a three-week high reached on Tuesday, following the recent escalation of geopolitical tensions in the Middle East.
Japanese investors also increased their purchases of foreign equities in the week to Aug. 24, spurred by a rally in overseas markets fuelled by optimism over expected Federal Reserve interest rate cuts starting in September.
They purchased a net 898.8 billion yen worth of overseas equities during the week, posting their largest weekly net purchase in three weeks, data from the Ministry of Finance showed.
The MSCI All-Country World Index .MIWD00000PUS reached new highs after Fed ChairJerome Powell's remarks at an economic conference in Jackson Hole last week solidified expectations that the U.S. central bank will implement its first rate cut at the Sept. 17-18 policy meeting.
Japanese long-term bonds gained a net 859.4 billion yen worth of foreign inflows as outsiders remained net buyers for a third successive week. Foreigners, however, ditched 2.66 trillion yen of short-term instruments, the most in a week since April 27.
Non-native investors, meanwhile, withdrew a net 438.3 billion yen from Japanesestocks, which was their fifth weekly net selling in six weeks.
Meanwhile, data from stock exchanges revealed that foreigners sold a net 398.89 billion yen worth of cash equities in the week ending Aug. 23, after two consecutive weeks of net purchases. They also sold a net 396.5 billion yen worth of derivatives.
($1 = 144.6400 yen)
Japanese investments in overseas debt securities https://tmsnrt.rs/3JW3oI3
Japanese investments in stocks abroad https://tmsnrt.rs/3nxoepG
Foreign flows into Japanese debt securities https://tmsnrt.rs/3nsVz5d
Foreign flows into Japanese stocks https://reut.rs/3SQDye4
Foreign flows into Japanese stocks & futures https://tmsnrt.rs/40Muzfc
Reporting by Gaurav Dogra and Patturaja Murugaboopathy in Bengaluru; Editing by Rashmi Aich and Eileen Soreng
Related Assets
Latest News
Disclaimer: The XM Group entities provide execution-only service and access to our Online Trading Facility, permitting a person to view and/or use the content available on or via the website, is not intended to change or expand on this, nor does it change or expand on this. Such access and use are always subject to: (i) Terms and Conditions; (ii) Risk Warnings; and (iii) Full Disclaimer. Such content is therefore provided as no more than general information. Particularly, please be aware that the contents of our Online Trading Facility are neither a solicitation, nor an offer to enter any transactions on the financial markets. Trading on any financial market involves a significant level of risk to your capital.
All material published on our Online Trading Facility is intended for educational/informational purposes only, and does not contain – nor should it be considered as containing – financial, investment tax or trading advice and recommendations; or a record of our trading prices; or an offer of, or solicitation for, a transaction in any financial instruments; or unsolicited financial promotions to you.
Any third-party content, as well as content prepared by XM, such as: opinions, news, research, analyses, prices and other information or links to third-party sites contained on this website are provided on an “as-is” basis, as general market commentary, and do not constitute investment advice. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, it would be considered as marketing communication under the relevant laws and regulations. Please ensure that you have read and understood our Notification on Non-Independent Investment. Research and Risk Warning concerning the foregoing information, which can be accessed here.
