By Dominic Lau
TOKYO, April 18 Foreign investors' net buying of
Japanese equities hit the highest last week since the Ministry
of Finance started collecting the data in 2005, buoyed by the
Bank of Japan's sweeping stimulus measures unveiled on April 4.
The investors bought 1.57 trillion yen ($16.1 billion) worth
of Japanese stocks in the week through April 13, piping the
previous record of 1.12 trillion yen in the week of March 3 to
Foreign players have ploughed 8.22 trillion yen into
Japanese stocks since mid-November, when Shinzo Abe, who became
Prime Minister in December, promised bold expansionary monetary
and fiscal policies during his election campaign.
During that period, Tokyo's benchmark Nikkei has rallied
more than 50 percent, while the yen has weakened more than 20
percent against the dollar to a four-year low.
The BOJ on April 4 stunned financial markets by announcing a
sweeping monetary expansion campaign aimed at breaking a
defationary cycle and ending two decades of stagnation. The bold
plan to inject about $1.4 trillion into the world's
third-largest economy over a two-year period has won plaudits
from around the globe, and lured more foreign investors into
"For a long period of time until recently, overseas
institutional investors would not even agree to meet us when we
made sales calls and told them we are a Japanese asset
management firm," said Akira Inoue, head of global business
development at Sumitomo Mitsui Trust Bank's global fiduciary
"Even after Japanese stocks' rally began late last year,
many took a wait-and-see attitude. But the situation changed in
March. Now, about 30-40 percent of institutional investors agree
to meet us," Inoue said. "Before that, 90 percent of our sales
call got cold reception."
The bank, a unit of Sumitomo Mitsui Trust Holdings,
has received more than a dozen requests for proposals from
potential clients to manage part of their assets in Japanese
stocks since the end of last year.
Separately, a monthly poll of fund managers by Bank of
America Merrill Lynch showed a net 20 percent of asset managers
were overweight Japan, up 5 percentage points from March.
The same survey, which was conducted between April 5 and 11
after the BOJ announcement, also showed the number of fund
managers who would like to go overweight Japan on a 12-month
view rose by 20 percentage points to a net 26 percent in April.
Japanese investors, on the other hand, extended their net
selling of foreign bonds to 331.9 billion yen last week after
selling 1.14 trillion yen the prior week.
Last week, they repatriated a total of 548.2 billion yen,
taking advantage of a weaker yen as it would boost their profit
when they translate foreign assets back to the Japanese
Since the start of the year, Japanese investors repatriated
a total of 8.57 trillion yen. That compared with a net outflow
of 3.32 trillion for the same period last year.
"Recent acceleration in yen weakness encouraged retail
investors to lock in profits," Nomura Securities said in a note.
"In addition, retail investors may prefer domestic risky assets,
especially Japanese equities to foreign assets as the economic
outlook has been improving significantly."
"Even though we expect toshin (investment trust) momentum to
recover gradually, there may have to be more net selling due to
profit-taking before a clear pick-up in the momentum."