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Local Investors Purchases Of Offshore Bonds Surge In Recent Weeks

JAPAN DATA
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Offshore investors were strong buyers of local bonds for the second straight week, with just over ¥1500bn in net inflows into the space. This was the best two week of inflows since mid March of this year. In contrast, we saw net outflows in terms of equities for offshore investors. We have seen net selling in this segment in 4 out of the last 5 weeks. This comes despite the continued recovery in Japan equity market sentiment post the early August sell-off.

  • In terms of Japan domestic outflows, we also saw local investors snapping up offshore bonds. We have seen local investors net purchase just over ¥4trln in offshore bonds in the past 3 weeks.
  • Broader trends around the Fed easing cycle likely commencing in September could be playing a role in such flows. Allocations to bonds may also be rising amid lingering recession fears (albeit which have receded in recent weeks).
  • Local investors bought offshore equities last week, but this only marginally offset the prior week's net selling.

Table 1: Japan Weekly Investment Flows

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Offshore investors were strong buyers of local bonds for the second straight week, with just over ¥1500bn in net inflows into the space. This was the best two week of inflows since mid March of this year. In contrast, we saw net outflows in terms of equities for offshore investors. We have seen net selling in this segment in 4 out of the last 5 weeks. This comes despite the continued recovery in Japan equity market sentiment post the early August sell-off.

  • In terms of Japan domestic outflows, we also saw local investors snapping up offshore bonds. We have seen local investors net purchase just over ¥4trln in offshore bonds in the past 3 weeks.
  • Broader trends around the Fed easing cycle likely commencing in September could be playing a role in such flows. Allocations to bonds may also be rising amid lingering recession fears (albeit which have receded in recent weeks).
  • Local investors bought offshore equities last week, but this only marginally offset the prior week's net selling.

Table 1: Japan Weekly Investment Flows

Keep reading...Show less