According to the latest market data, foreign investors sold Japanese stocks worth a net 74 billion yen (approximately 468.3 million USD) in the week ending January 4th. This sell-off was primarily driven by profit-taking and risk aversion during the long holiday. The previous week, foreign investors had already net sold about 562.7 billion yen in Japanese stocks.
Annual Performance and Latest Trends
Looking at 2024 as a whole, foreign investors net purchased 1.23 trillion yen in Japanese stocks in the first half of the year, but significantly net sold 4.77 trillion yen in the second half. Despite this, the Nikkei 225 index rose 19.22% over the year, marking the second-best performance in eleven years. However, with the market reopening this Monday, the Nikkei 225 index fell by 1.15% due to investor profit-taking.
Revival in Japan's Bond Market
In contrast to the stock market, Japan's bond market showed signs of revival at the beginning of the new year. Data indicates that foreign investors net purchased 227.5 billion yen in Japanese bonds during the week ending January 4th, ending three consecutive weeks of net selling. Among these, net purchases of long-term bonds were 154.8 billion yen, and short-term bonds were 72.7 billion yen.
Cross-Border Transactions by Japanese Investors
At the same time, Japanese investors showed different trends in overseas markets. For the fourth consecutive week, they net purchased 325.1 billion yen in foreign stocks in the week ending January 4th, indicating sustained interest in overseas markets. However, in the bond market, Japanese investors net sold foreign bonds for the third consecutive week, with net sales of 331.8 billion yen in long-term bonds and 4.9 billion yen in short-term bonds.
Market Outlook
Analysts point out that the sell-off by foreign investors in Japanese stocks reflects concerns over global economic uncertainty and local market profit-taking. Meanwhile, the revival in Japan's bond market might indicate that investors are seeking a more stable asset allocation to cope with potential market volatility.
In the future, as global economic and monetary policies evolve, the flows of foreign capital in Japan's stock and bond markets will become a focal point for market attention. Investors need to closely monitor changes in the global macroeconomic environment and the release of domestic economic data for their potential impact on capital markets.
