Bond yield surge drives foreign investors to sell Japanese stocks

In the week leading up to August 22, Japanese foreign investors sold a record 764.1 billion yen worth of stocks, marking the largest outflow since June. This came as bond yields worldwide climbed to decade highs due to worries about government debt and persistent inflation. The 10-year Japanese government bond yield reached a three-decade high of 2.945%, prompting technology stocks like Tokyo Electron and Kioxia Holdings to drop 8.19% and 5.89% respectively.

SoftBank Group also saw a 8.43% decline. The broader Nikkei index fell 3.93% during this period. While foreign investors were net sellers of Japanese equities, they purchased 435.2 billion yen worth of long-term bonds, the most since two weeks prior. However, they continued to liquidate Japanese short-term bills, posting another weekly outflow of 2.07 trillion yen.

Japanese investors themselves sold 1.98 trillion yen in foreign long-term bonds and 210.3 billion yen in short-term bills, marking their largest combined weekly net sales since April. They also sold a record 869 billion yen in overseas equities, their biggest outflow since June.