Japanese Investors Shift Focus from Stocks to Bonds as Yen Weakens
In July, Japanese investors continued selling foreign stocks while turning to foreign bonds amid a weakened yen. Data from Japan's Ministry of Finance showed they withdrew 536.4 billion yen from foreign equities, yet invested heavily in foreign bonds, marking a significant shift in investment strategy.
In a strategic shift, Japanese investors divested from foreign stocks for a third consecutive month in July, capitalizing on elevated valuations from a steep market rally. As per the Ministry of Finance, they redirected focus towards more lucrative foreign bonds, buoyed by enhanced returns from a weakened yen.
Throughout July, Japanese investors offloaded 536.4 billion yen in foreign equities, following a prior month sale of 1.99 trillion yen. Conversely, their appetite for foreign bonds intensified, resulting in net acquisitions worth 3.63 trillion yen.
The yen's decline, a sharp 4.5% dip against the dollar, fueled this investment recalibration. Trust accounts, including pension funds, divested 1.52 trillion yen in foreign stocks and increased holdings in long-term bonds by 419.6 billion yen. This activity underscored an inclination towards securing higher yields in a challenging currency environment.
(With inputs from agencies.)
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