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22 Apr 2016
JPY: Japanese capital flows observation - BBH
Research Team at BBH, notes the observations that are drawn from the weekly report of Japan's Ministry of Finance unless noted otherwise.
Key Quotes
• “Japanese investors bought a record amount of foreign bonds in the four-week period last month (JPY1.47 trillion or roughly $130 bln). It was nearly twice the amount in February and a little more than twice the purchases from March 2015. It was nearly twice the amount in February and a little more than twice the purchases from March 2015.
• Foreign investors bought large amounts of Japanese stocks in the early days of the Abe government. However, more recently, they have been sellers. The four-week average has been negative (net selling) since last September. Foreign investors were net sellers of Japanese shares since the second week of the year through the end of March. However, over the last three weeks, buyers have reemerged, snagging JPY1.1 trillion over the period. The buying has been sufficient to lift the four-week average into positive (net buying) for the first time this year.
• Japanese pension funds have been engaged in a large-scale diversification effort, partly driven by low yields in the JGB market.
• Counter-intuitively, foreigners are notable buyers of Japanese government bonds and apparently have not been deterred by the negative yields.
• Owing to the relative volatility, institutional investors typically hedge (or carry higher hedge ratios) foreign bonds rather than foreign stocks.”
Key Quotes
• “Japanese investors bought a record amount of foreign bonds in the four-week period last month (JPY1.47 trillion or roughly $130 bln). It was nearly twice the amount in February and a little more than twice the purchases from March 2015. It was nearly twice the amount in February and a little more than twice the purchases from March 2015.
• Foreign investors bought large amounts of Japanese stocks in the early days of the Abe government. However, more recently, they have been sellers. The four-week average has been negative (net selling) since last September. Foreign investors were net sellers of Japanese shares since the second week of the year through the end of March. However, over the last three weeks, buyers have reemerged, snagging JPY1.1 trillion over the period. The buying has been sufficient to lift the four-week average into positive (net buying) for the first time this year.
• Japanese pension funds have been engaged in a large-scale diversification effort, partly driven by low yields in the JGB market.
• Counter-intuitively, foreigners are notable buyers of Japanese government bonds and apparently have not been deterred by the negative yields.
• Owing to the relative volatility, institutional investors typically hedge (or carry higher hedge ratios) foreign bonds rather than foreign stocks.”