Japanese stocks see biggest weekly foreign outflows in nearly one year
Updates story with graphic and foreign activity in Japanese stocks according to exchange data in paragraph 3
Sept 20 (Reuters) -Overseas investors withdrew heavily out of Japanese stocks in the week ended Sept. 14 due to a stronger yen and heightened caution ahead of monetary policy decisions by the Federal Reserve and the Bank of Japan.
Foreigners were net sellers of Japanese stocks for an eighth week in nine, pulling out 3.01 trillion yen ($21.13 billion), the biggest outflow since Sept. 23, according to data from the Ministry of Finance.
Exchange data also showed that foreigners pulled 1.54 trillion yen out of Japanese cash equity markets, the largest amount since at least 2018. They, however bought derivative contracts for the fourth week running, with about 445.23 billion yen in net purchases.
The yen's rally to its highest level against the dollar in more than a year fuelled worries among investors about its impact on the earnings outlook for Japanese exporters.
However, Japanese stocks rose more than 2% on Friday, driven by a global rally after the U.S. central bank's oversized rate reduction, an optimistic growth outlook and the Bank of Japan's decision to stand pat on its rates.
BofA said a full-scale market rally is not expected until at least November, citing the need to process several key events such as the U.S. presidential election on Nov. 5, the FOMC meeting on Nov. 7, and the release of Japanese companies' first-half results also in November.
With these significant outflows last week, foreigners have divested approximately 5.34 trillion yen from Japanese stocks in the second half of this year, largely reversing around 6 trillion yen of net purchases made in the first half.
Overseas investors, meanwhile, purchased about 1.38 trillion yen worth of long-term Japanese bonds, the largest amount in four weeks, but ditched a net 65.9 billion yen worth of short-term instruments.
Simultaneously, Japanese investors acquired a massive 2.1 trillion yen in long-term foreign bonds, marking their sixth net purchase in seven weeks. However, they sold off a marginal 7.4 billion yen in short-term securities.
Conversely, they sold 87.2 billion yen worth of overseas equities, snapping their four-week-long buying streak.
($1 = 142.4400 yen)
Foreign flows into Japanese stocks https://reut.rs/3SQDye4
Foreign flows into Japanese stocks & futures https://tmsnrt.rs/40Muzfc
Foreign flows into Japanese debt securities https://tmsnrt.rs/3nsVz5d
Japanese investments in overseas debt securities https://tmsnrt.rs/3JW3oI3
Japanese investments in stocks abroad https://tmsnrt.rs/3nxoepG
Reporting by Gaurav Dogra and Patturaja Murugaboopathy in Bengaluru; Editing by Sherry Jacob-Phillips and Varun H K
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