Foreign Investors Flock to Japanese Bonds Amid Yield Opportunities
Foreign investors poured into Japanese long-term bonds for the first time in five weeks, attracted by higher yields and the potential reduction of ultra-long-term debt issuance by the Ministry of Finance. Meanwhile, Japanese stocks gained significant cross-border inflows, while domestic investors sold foreign equities and withdrew from long-term foreign debt.
Foreign investors have returned to Japanese long-term bonds, marking their first significant inflow in five weeks. The Ministry of Finance's data reveals a net purchase of 1.17 trillion yen ($8.18 billion) driven by higher yields and expectations of reduced ultra-long-term debt issuance.
Yields on 30- and 40-year Japanese bonds saw a reduction last week following previous record highs. For foreign investors, swapping dollars or euros into yen offers substantial advantages as yen swap rates enhance yield returns.
Japanese equities enjoyed their ninth consecutive week of popularity, attracting $336.1 billion in cross-border inflows. Concurrently, Japanese investors executed large-scale divestments of foreign equities and withdrew from long-term foreign debt, indicating a shift in domestic investment strategies.
(With inputs from agencies.)
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