Foreign investors sell Japanese stocks for second week on yen intervention concerns

Foreign investors continued to sell Japanese stocks for a second week, Aug 8, driven by concerns over yen intervention and its impact on their purchasing power. The Bank of Japan aims for a stronger yen, which would boost the US dollar valuation of foreign investors' Japanese assets but diminish their ability to buy new stocks. They incurred net sales of 368.5 billion yen worth of Japanese stocks, up from the previous week's 392.5 billion yen.

The yen reached a near three-month peak of 155.21 per dollar following the intervention in currency markets, trading at 159.43 per dollar as of the latest update. While a stronger yen elevates the value of foreign investors' Japanese assets in US dollars, it also diminishes their buying power for new stock purchases. Despite this, the Nikkei index rose by 1.93% last week, buoyed by gains in US technology stocks, particularly AI-related shares.

Japanese long-term bonds experienced a slight outflow of 58.7 billion yen, after receiving 558.9 billion yen in inflows the week prior. Conversely, Japanese short-term bills attracted 215.9 billion yen in foreign inflows. Conversely, Japanese investors showed strong interest in foreign assets, buying a net 963.5 billion yen worth of foreign stocks - their highest weekly purchase since April 4.

Additionally, they amassed a net 1.63 trillion yen in foreign long-term bonds, the most since May 9, while selling approximately 781.4 billion yen of short-term bills.