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Offshore Investors Sell Local Equities & Bonds

JAPAN DATA
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In terms of offshore inflows into local equities we saw a pause last week, albeit with a modest -¥49bn in net outflows. This ended a positive run of inflows seen in the prior 3 weeks. Some cracks that have emerged in the tech equity backdrop may see a further retracement in such flows for this week. The Topix is back to late June levels.

  • On the bond side, offshore investors returned to net sellers in this space. This has been the general trend in recent months and fits with gradual BoJ tightening, which is improving onshore yields but pushed bond prices lower. Next week's focus at the BoJ meeting will be on the central bank's tapering plans, although a Reuters article from late yesterday indicated the central bank was still weighing up a potential hike.
  • In terms of Japan outflows to the rest of the world, local investors were net sellers of offshore bonds, which has been the general theme in recent months. Outbound flows to offshore equities were just in positive territory, but again the trend in this segment has been for net selling flows.

Table 1: Japan Weekly Investment Flows

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In terms of offshore inflows into local equities we saw a pause last week, albeit with a modest -¥49bn in net outflows. This ended a positive run of inflows seen in the prior 3 weeks. Some cracks that have emerged in the tech equity backdrop may see a further retracement in such flows for this week. The Topix is back to late June levels.

  • On the bond side, offshore investors returned to net sellers in this space. This has been the general trend in recent months and fits with gradual BoJ tightening, which is improving onshore yields but pushed bond prices lower. Next week's focus at the BoJ meeting will be on the central bank's tapering plans, although a Reuters article from late yesterday indicated the central bank was still weighing up a potential hike.
  • In terms of Japan outflows to the rest of the world, local investors were net sellers of offshore bonds, which has been the general theme in recent months. Outbound flows to offshore equities were just in positive territory, but again the trend in this segment has been for net selling flows.

Table 1: Japan Weekly Investment Flows

Keep reading...Show less