In March, Japanese investors were big sellers of overseas debt, as prices of overseas bonds declined due to concerns over inflation and tighter measures by major central banks.
Domestic investors exited a net 2.36 trillion Japanese yen worth of overseas bonds last month after selling a net 3.2 trillion in February, according to Japan's Ministry of Finance.
After buying them in the previous month, they sold foreign equities worth 455.7 billion yen.
The selling of foreign bonds increased later in the month, indicating that they became more worried about a hawkish pivot from the Federal Reserve around the FOMC, said Naka Matsuzawa, chief Japan macro strategist at Nomura.
The big sales by local investors come despite the decline of the Japanese yen in the last month.
Adam Cole, chief currency strategist at RBC Capital Markets, said in a note, JPY collapsed in March, just at the time when local investors were bringing almost unprecedented amounts of capital home.
He stated that many of the bonds sold were likely held on an FX hedged basis, implying limited FX flow and reflecting the low cost of hedging in all G 10 markets for the last two years.
The cumulative sales of foreign bonds and equities in the first quarter of this year stood at 5.28 trillion yen, the biggest net selling in eight years.
The Bank of Japan BoJ in its March monetary policy meeting maintained its massive stimulus despite uncertainty about the global outlook, reinforcing expectations that it would remain an outlier in the global shift towards tighter monetary settings.
In the first two months of this year, Japanese investors sold U.S. bonds and equities worth 3.11 trillion yen and 127 billion yen, according to the data from the Bank of Japan.
They purchased 1.16 trillion worth of European bonds in the same period and sold 232 billion yen in European equities.
Japanese investors also offloaded Chinese bonds of 294.69 billion yen and equities of 25.26 billion yen, according to the data up to February.
Japanese investments in US and European assets: https: tmsnrt.rs 3 JmULEk