In the week ending April 4, Japanese equities experienced substantial foreign capital inflows, reversing a three-week streak of net selling as investor sentiment stabilized ahead of a ceasefire in Middle East tensions. Data released by Japan's Ministry of Finance on Thursday showed that foreign investors made net purchases of Japanese stocks totaling 2.96 trillion yen (approximately $186.5 billion) during the week, recouping nearly two-thirds of the 4.45 trillion yen net outflow recorded the previous week. The Nikkei 225 Index surged approximately 5.39% on Wednesday, influenced by a ceasefire agreement reached between the U.S. and Iran the prior day. Seasonal factors also contributed to the foreign inflows observed last week. According to Tomoya Nishioka, Chief Equity Strategist at Nomura Securities Japan, overseas financial institutions typically shift assets from Tokyo to offshore entities before the determination of voting and dividend rights in March, and then transfer them back in April. Foreign investors accumulated net sales of nearly 7.37 trillion yen in Japanese stocks throughout March. A surge in Japan's benchmark government bond yield to its highest level in nearly three decades also drove foreign inflows of 2.46 trillion yen into Japanese long-term bonds during the week. Meanwhile, Japanese investors allocated approximately 1.44 trillion yen to overseas equities during the same period, marking the highest volume in 11 months. However, they recorded net sales of foreign long-term bonds amounting to 2.46 trillion yen, maintaining a net selling position for the fourth consecutive week.
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