During the week ending April 4, Japanese equity markets experienced substantial inflows from foreign investors, marking a reversal from three consecutive weeks of selling. Investor sentiment stabilized ahead of a temporary ceasefire agreement between the United States and Iran.
Data released by Japan's Ministry of Finance on Thursday indicated that foreign investors were net buyers of Japanese stocks to the tune of 2.96 trillion yen (approximately $186.5 billion) for the week. This influx nearly offset two-thirds of the 4.45 trillion yen net outflow recorded the previous week.
Influenced by the ceasefire agreement between the US and Iran, the Nikkei 225 index rose approximately 5.39% on Wednesday.
Seasonal factors also contributed to the foreign capital inflows observed last week.
Tomochika Kitaoka, Chief Equity Strategist at Nomura Securities in Japan, explained that foreign financial institutions typically transfer their stock holdings from Tokyo to offshore entities in March, a period when voting rights and dividend allocations are yet to be finalized. These holdings are then often transferred back to Tokyo during April.
In March, foreign investors had sold Japanese stocks worth nearly 7.37 trillion yen.
Last week, the yield on Japan's benchmark government bond surged to its highest level in nearly three decades. This development also attracted foreign capital, resulting in inflows of 2.46 trillion yen into the Japanese long-term bond market.
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