Japanese net buying of foreign bonds marks longest run in 3 years
TOKYO Dec 12 (Reuters) - Japanese investors ploughed $4 billion into foreign bonds last week, the ninth straight week of net buying and the longest such run in three years, Ministry of Finance data showed on Thursday.
Supported by expectations of a widening yield gap between U.S. Treasuries and Japanese government bonds the investors bought a net 413 billion yen ($4 billion) worth of foreign bonds in the week through Dec. 7.
Japanese investors amassed 5.7 trillion yen in foreign debt over the nine weeks, although they remained net sellers of bonds worth 1.93 trillion yen over the year.
Purchases of overseas assets could potentially weaken the yen, an added boost to Japanese exporters, although any impact on foreign exchange markets would be muted if investors hedged their bond buying.
Analysts have expected Japanese investors to hunt for higher returns abroad after the Bank of Japan stunned financial markets in April by undertaking to inject $1.4 trillion worth of yen into the economy in less than two years.
Yields on benchmark 10-year U.S. Treasuries hit a near three-month high of 2.932 percent on Friday after the U.S. jobs report came in much stronger than expected.
By contrast, the 10-year JGB yield stood as high as 0.680 percent at the end of last week.
The spread between the 10-year U.S. Treasury and the 10-year JGB touched the widest level of 2.209 percentage points since September last Thursday, according to Thomson Reuters Datastream.
Japanese investors, including banks, pension funds and life insurance companies, had 40 percent of their debt holdings in U.S. dollar-denominated bonds as at end of 2012 -- a large chunk of them in U.S. Treasuries.
Foreign investors, on the other hand, bought 113.8 billion yen worth of Japanese stocks last week, the sixth straight week of net purchases.
They have ploughed 13.83 trillion yen into Japanese stocks since the beginning of this year, helping propel gains in the benchmark Nikkei to 47.5 percent so far this year, heading for its best yearly rise since 1972.
In comparison, foreign investors bought a total of 2.13 trillion of Japanese stocks in the whole of 2012. ($1 = 102.4650 Japanese yen) (Reporting by Dominic Lau; Editing by Eric Meijer)