Offshore Investors Sold Local Stocks, Bought Bonds Ahead Of The BoJ Hike

Japan weekly investment flows were volatile through last week. We saw offshore investors selling down local share holdings sharply, with -¥1464.6bn in net outflows from this space. This was the largest weekly inflow since mid September last year. It came ahead of the BoJ decision on Tuesday (which saw rates rise, albeit with a dovish outlook). It also follows a generally positive inflow backdrop since the start of the year into the space. Focus will be on whether these investors return this week, given the positive backdrop for headline indices over recent sessions (fresh highs for the Nikkei 225).

• Offshore investment inflows into local Japan bonds surged though up ¥2157.7bn. This was the largest weekly inflow since March last year. Inflow momentum into this space has been very strong since the start of March.
• In terms of Japan domestic outflows, we saw local investors selling both offshore stocks and bond holdings. Selling of overseas stocks was the third straight week of outflows from this space by local investors.

Table 1: Japan Weekly Investment Flows

Source: MNI - Market News/Bloomberg