Japan Continues Net Buying Of International Bonds, Even With FY Turn Nearing

Weekly international security flow data from the Japanese MoF revealed that Japanese investors continued to deploy net purchases of foreign bonds last week, in what we assume to be FX-unhedged positions (owing to elevated FX hedging costs & subsequent impact on FX-hedged yields) in reaction to the worry re: the global banking sphere, although the pace of net purchases saw a notable step down from that seen in the previous week (which is understandable given that last week’s net purchases have only ever been surpassed by one week of net purchases registered in the depths of the initial COVID outbreak). There hasn’t been any signs of meaningful repatriation of Japanese capital ahead of the turn of the Japanese FY (although Dai-Ichi Life recently outlined their intention to reshore capital, with a preference for deployment in the super-long end of the JGB curve).

• Elsewhere, Japanese investors were small net sellers of international equities last week.
• International investors registered the largest round of net weekly sales of Japanese bonds since the run up to the BoJ’s January meeting, although got nowhere near reversing the prior week’s record net purchases.
• Meanwhile, international investors stepped up the net selling pace wen it came to Japanese equities, registering the sharpest round of net sales observed since September ’20, in what was the fifth straight week of net sales.

Source: MNI - Market News/Bloomberg/Japanese Ministry Of Finance