Japanese investors favoured foreign equities over bonds in August

Japanese investors demonstrated a significant shift towards foreign equities in August, pouring 1.3 trillion yen ($8.45 billion) into overseas shares while reducing their holdings of overseas bonds by 1.02 trillion yen. This shift was driven by strong global earnings and optimism around artificial intelligence, which boosted risk appetite.

The pullback from overseas bonds came as global debt markets experienced a sharp selloff, with long-term yields rising due to concerns over inflation, heavy government borrowing, and the prospect of tighter monetary policy. The data highlights a rotation within foreign assets rather than a broad retreat from overseas markets, with investors maintaining exposure to global equities while reducing fixed-income holdings.

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