Mizuho Bank: Japanese investors remained net buyers of overseas bonds

Mizuho Bank analysts point out that the latest MoF’s weekly International Trends in Securities data showed that the Japanese investors remained net buyers of overseas bonds (¥193.7bn) although volume on the week was small.

Key Quotes

“Foreign bond buying volumes have been heavy in recent weeks and the year-to-date volume is now above the ¥13trn level and is on course to be one of the heaviest (fiscal) years of activity this century. The ¥20trn volume seen in FY10 seems out of reach but the volumes of FY02 and FY15 could both be surpassed.”

“In contrast, equity and fund volumes continue to decline. Net selling in the week to 15 Feb was limited at ¥59.1bn but the cumulative YTD total is now just above ¥6trn. 4m ago, YTD volumes in equities &bonds were roughly equivalent but have diverged sharply since.”

“This looks to be a function of more volatile markets. Japanese investors appear happier buying US bonds now that it seems yields have peaked & less buying any overseas equities & funds as outlook for equity markets darkens amid tighter policy & rising trade tensions.”

“Data also show overseas investors continuing to sell Jap equities. Selling scale in recent weeks seems to have diminished but they continue to retain a cautious stance. This could be sensible given rising recession risks hinted at in PMI report.”

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