Aug 16 2024: In the week leading up to August 10, foreign investors significantly increased their purchases of Japanese stocks, driven by reassurances from policymakers aimed at stabilizing the market after recent turmoil had led to the biggest one-day plunge in Japanese shares since 1987.
According to finance ministry data, cross-border investors bought a net 521.9 billion yen ($3.51 billion) worth of Japanese shares, reversing a trend of three consecutive weeks of net selling.
Last week, Japanese policymakers signaled their intent to prevent further declines in the stock market. Concurrently, the Bank of Japan indicated it would maintain steady interest rates amidst market instability, following a historic 12.4% drop in the Nikkei share average on August 5. This drop was fueled by concerns over a potential U.S. recession and the unwinding of carry trades funded by low-cost yen.
However, those concerns quickly dissipated, and the Nikkei share average has since surged over 20%, recovering from its nine-month low of 31,156.12 on August 5.
In addition to equities, foreign investors also reversed an eight-week trend of selling Japanese bonds, becoming net buyers last week. They purchased a net 1.44 trillion yen in long-term bonds, the highest amount since May 11, and a net 561.8 billion yen in short-term securities.
Meanwhile, Japanese investors bought 1.54 trillion yen worth of long-term overseas bonds last week, marking their largest weekly net purchase in 12 weeks. They also acquired short-term instruments, totaling a net 453.5 billion yen.
On the other hand, Japanese investors sold off foreign shares worth a net 328.1 billion yen after three consecutive weeks of net purchases.
($1 = 148.9000 yen)