Japanese investors pull out of foreign bonds after European debt selloff #JapanFinance

Japanese investors sold the highest quantum of foreign bonds in over a month in the week through March 8, turning cautious due to a selloff in Eurozone debt markets triggered by Germany’s plans for robust fiscal spending.

They sold a net 355.9 billion yen ($2.40 billion) worth of long-term foreign bonds during the week, their largest weekly net sales since February 1, data from Japan’s Ministry of Finance showed.

Germany’s 10-year bond yield reached a 16-1/2-month peak of 2.938% on Wednesday as Friedrich Merz, likely to be the next chancellor, sought support for significantly increased state borrowing to stimulate the economy and enhance military spending.

Japanese investors have allocated approximately 2.96 trillion yen to long-term foreign debt securities this year, a decrease from net purchases of about 5.8 trillion yen during the same period last year.

Meanwhile, Japanese market participants took advantage of a stronger yen to boost their position in foreign shares, which are available at reduced prices following a recent global selloff in equities.

They pumped a robust 1.26 trillion yen into foreign shares, the biggest amount for a week since August 3.

Meanwhile, foreign investors bought a net 686.4 billion yen worth of long-term foreign bonds, extending net purchases into a fourth consecutive week. They also snapped up a net 1.1 trillion yen worth of short-term instruments, the highest in seven weeks.

Simultaneously, Japanese stocks faced a net 220.5 billion yen worth of foreign outflows, with cross-border investors withdrawing funds for a sixth straight week.