Japanese stocks see biggest weekly foreign outflow in six months

A visitor stands next to an electronic screen displaying Japan’s Nikkei stock prices quotation board as the average surged past an all-time record high scaled in December 1989, inside a building in Tokyo, Japan Feb 22, 2024. REUTERS/Issei Kato

Foreign investors pulled more than a trillion yen out of Japanese stocks last week, as some stocks went ex-dividend and expectations of currency market intervention by the Bank of Japan led to profit booking after a recent rally.

They offloaded a net 1.18 trillion yen worth of stocks during the week to March 29 – their largest weekly net disposal since Sept. 29, 2023, data from stock exchanges showed.

Overseas investors sold a net 967.32 billion yen of derivative contracts, marking the largest weekly net selling in nine weeks. They also pulled about 213 million yen out of cash equities.

Last week, the Nikkei shed about 1.3 percent following 5.63 percent weekly gains and a fresh life high of 41087.75 in the prior week.

U.S. banks Morgan Stanley and JP Morgan had also warned last week that Japan’s top-performing stocks were at risk of a sell-off because of overcrowded long positions in large companies.

Meanwhile, foreigners purchased long-term Japanese bonds of 842.2 billion yen on a net basis last week, in contrast to a sharp 3.89 trillion yen worth of net selling, a week ago, data from the Ministry of Finance showed.

Japanese short-term debt instruments, meanwhile, witnessed 2.78 trillion yen worth of foreign outflows, the biggest weekly net selling since December 29.

Japanese investors, meanwhile, sold a net 1.66 trillion yen of long-term foreign bonds, the most in a week since Oct 2022 while exiting about 25.1 billion yen of short-term debt securities.

They also withdrew 233.6 billion yen out of overseas equities, posting a fourth weekly net selling in five weeks.