Japanese investors turned defensive in early November, offloading ¥581.1 billion ($3.85B) in foreign equities — their largest weekly sale since early October, according to Japan’s Ministry of Finance.
The shift reflects growing caution following hawkish remarks from U.S. Federal Reserve officials and stretched global equity valuations after recent rallies.
Dallas Fed President Lorie Logan said the central bank “should not have cut rates in October” and warned against further easing in December — fueling profit-taking sentiment.
The MSCI World Index slipped 1.6%, marking its first weekly loss in a month.
🔹 Key Shifts in Global Capital Flows
- 📉 Foreign Equity Sales: ¥581.1B net divestment
- 📉 Long-Term Bond Sales: ¥354.4B net outflow (5th in 6 weeks)
- 📉 Short-Term Bills Sold: ¥798.7B
- 💰 Foreign Inflows to Japan:
- ¥690.1B into Japanese equities (5th straight week of net buying)
- ¥1.83T into short-term debt instruments
- ¥280.6B into long-term bonds
Despite continued foreign buying, the Nikkei 225 fell roughly 5% this week as tech stocks suffered sharp losses.
🔹 The Takeaway
Japan’s investor rotation highlights renewed sensitivity to U.S. monetary signals and global valuation risks.
Meanwhile, foreign investors continue to see Japan as a relative safe haven, pouring into domestic assets amid yen stability and improving yields.
In an environment of shifting rate expectations, Japan’s capital flows are becoming a barometer of global investor sentiment.