Japanese Investors Sell Foreign Assets for Third Consecutive Month in December

Japanese investors continued to offload foreign assets for the third month in a row in December, responding to rising U.S. bond yields and profit-taking amid fluctuations in the yen. The sales included a net 310.7 billion yen ($1.97 billion) worth of foreign equities and 1.22 trillion yen in bonds, marking the largest bond disposals since October 2024. Despite this, some Japanese investment trust management companies and life insurers bought foreign stocks, highlighting a mixed trend in overseas investment.

Throughout 2024, Japanese investors were net sellers of foreign equities, offloading approximately 3.48 trillion yen, with the majority of sales occurring in the last quarter. However, they purchased 4.16 trillion yen in foreign bonds over the same period. This shift reflects growing caution among investors as they scale back expectations for U.S. Federal Reserve interest rate cuts, influenced by persistent inflation concerns and policies from the incoming U.S. administration under President-elect Donald Trump.

By the end of the year, U.S. market conditions showed signs of volatility, with the dollar index reaching a two-year high and the benchmark 10-year yield rising to its highest point since November 2023. The Fed’s December meeting minutes revealed concerns over sustained price pressures, further affecting investor sentiment. Additionally, Japanese investors were also net sellers of U.S., European, and British stocks through November 2024, signaling ongoing caution in foreign asset markets.