Japanese Investors Pull Back Amid U.S. Federal Reserve Signals

Japanese investors sold off significant foreign stocks and bonds as they reacted to hawkish comments from U.S. Federal Reserve officials. The divestment marked the largest weekly sale since early October, influenced by a strategic preference to secure profits. Conversely, foreign interest in Japanese assets increased.

In a noteworthy financial move, Japanese investors offloaded a substantial amount of their foreign stock holdings in the week leading up to November 1. This decision came as investors expressed caution following the U.S. Federal Reserve's hawkish remarks, prompting them to capitalize on recent market gains.

Data from Japan's Ministry of Finance revealed that a net 581.1 billion yen, equivalent to $3.85 billion, was liquidated—the largest weekly sales since October 4. Dallas Fed President Lorie Logan pointed to interest rate adjustments, a balanced labor market, and persistent inflation concerns as factors influencing investor sentiment.

In the same vein, Japanese investors pulled net 354.4 billion yen from long-term foreign bonds and discarded short-term bills worth 798.7 billion yen. Meanwhile, foreign investors showed sustained interest, injecting 690.1 billion yen into Japanese stocks and 1.83 trillion yen into Japanese short-term debt instruments.

(With inputs from agencies.)