Foreign investors continued to flee assets denominated in Japanese yen. In the past week, they got rid of stocks, financial derivatives and yen themselves in cash or in bank accounts.
Data from Japan‘s financial markets show that foreigners sold yen-denominated assets for more than 750 billion yen last week. That’s over seven billion dollars. This is the largest outflow of foreign capital from Japanese stock exchanges since mid-March this year. Foreign investors were getting rid of both stocks and financial derivatives, as well as the yen itself in cash.
The ongoing US election campaign ahead of the upcoming presidential election is to blame. Japanese shares have long been perceived as assets for which investors are willing to take a higher risk. But when the US presidential campaign culminates, investors clearly do not intend to take this higher risk. At least not the foreign ones.
According to Reuters, it is also worth noting that investors considering Japanese shares have not yet managed to return to Japan after capital began to leave the Japanese stock exchanges in March. But analysts predict that capital inflows to Japan should occur in the coming months.