Global Investors Shift Strategies: A Closer Look at Japanese Bond and Equity Markets
In May, foreign investors reduced their holdings of Japanese long-term bonds, selling 134.5 billion yen, while buying 193.1 billion yen in short-term bills. Japanese banks significantly increased foreign bond purchases. Concurrently, they invested heavily in U.S. and European equities, marking notable sector shifts amid rising fiscal concerns.
Foreign investors retreated from Japanese long-term bonds in May, selling a net 134.5 billion yen, indicating their first monthly divestment since December 2024. This shift underscores rising fiscal apprehensions and underwhelming bond auctions affecting their appetites for long-term Japanese debt.
Despite the dip in long-term bonds, short-term securities saw an influx, with acquisitions totaling 193.1 billion yen. On another front, Japanese equities remained attractive, drawing in foreign inflows of 2.49 trillion yen, succeeding significant investments in April.
Moreover, Japanese institutions took a divergent path with record-breaking investments in foreign bonds, led by banks acquiring a staggering 2.94 trillion yen. Conversely, Japanese portfolios saw withdrawals from German bonds amidst altering fiscal landscapes in Europe, highlighting a strategic pivot in global investment patterns.
(With inputs from agencies.)
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