Japanese investors sold overseas stocks for the third consecutive month in July, with a net withdrawal of 536.4 billion yen, switching to high-yield bonds.

In July, Japanese investors sold foreign stocks for the third consecutive month. After a significant stock market rally led to overvaluation, they decided to take profits. At the same time, due to the depreciation of the yen increasing returns, they purchased a large amount of higher-yield foreign bonds. Data released by the Japanese Ministry of Finance on Friday shows that in that month, Japanese investors withdrew approximately 536.4 billion yen (equivalent to 3.64 billion US dollars) from foreign stocks. In June, they had sold foreign stocks worth 1.99 trillion yen. Meanwhile, Japanese investors purchased foreign bonds worth 3.63 trillion yen in July, marking the third consecutive month of net purchases. The yen fell by about 4.5% against the US dollar last month, the largest single-month drop since December 2024. Japanese trust accounts (pension funds) sold foreign stocks for the third consecutive month and bought long-term bonds. They net sold 1.52 trillion yen worth of foreign stocks and net purchased 419.6 billion yen worth of long-term bonds. Japanese banks, investment trust management companies, and insurance companies had net inflows of 445.5 billion yen, 333.5 billion yen, and 207.1 billion yen, respectively, into foreign stocks in July. The foreign bond market received a total of 3.82 trillion yen of Japanese long-term bond investments. However, there was a net withdrawal of 196.6 billion yen from short-term notes. Another set of data provided by Japanese banks shows that market participants in Japan net purchased 5.73 trillion yen of US bonds in the first half of the year, lower than the 6.4 trillion yen net purchase in the same period last year. They also invested 2.37 trillion yen in European bonds in the first half of the year. French and German bonds received 702 billion yen and 494 billion yen of net investments from Japan, respectively.