Japanese investors buys nearly $720 mln in foreign currency toshins

TOKYO Wed May 8, 2013 9:59pm EDT

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TOKYO May 9 (Reuters) - Japanese investors appear to be ploughing more money into foreign currency assets in keeping with widespread expectations that Japan's aggressive push to reflate its economy would lead to a massive flight of funds out of the country and further weaken the yen.

They bought 71 billion yen ($718.5 million) of foreign currency-denominated toshins, or investment trusts, last week, up from 28 billion yen net purchases in the previous week, according to Nomura.

But Nomura said in a report that Japanese investors still prefer local exposure for now. It said they bought 92 billion yen of domestic assets via toshins last week, a bigger amount than foreign assets.

Japan's Nikkei share average has rallied nearly 66 percent and the yen has weakened 23 percent against the dollar since mid-November, when Prime Minister Shinzo Abe began promising bold expansionary monetary and fiscal policies to pull the world's third-largest economy out of doldrums.

Japanese stocks got a further boost and yen bears took the upper hand after the Bank of Japan announced sweeping stimulus measures on April 4, promising to inject $1.4 trillion into the economy in less than two years.

The massive quantitative easing has heightened expectations that Japanese investors will start to increase their offshore investments to seek higher returns.

Last week, Japanese investors were net buyers of 59 billion yen worth of currency selection-type toshins, which can invest in Japanese assets but offer hedging exposure to foreign currency, such as Brazilian real, Turkish lira and Mexican peso.

Nomura said Brazilian real was the most popular choice.

($1 = 98.8200 Japanese yen) (Reporting by Dominic Lau; Editing by Shri Navaratnam)

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