Bond yield surge drives foreign investors to sell Japanese stocks

Foreign fund outflows from Japanese equities ​rose to their highest ​in nearly two ‌months in ​the week ended August 22, as a global surge in bond yields, driven by concerns ‌over sovereign debt, weighed on technology and other growth shares. Foreign investors were net sellers of Japanese stocks worth 764.1 billion yen ($4.80 billion), the ‌largest weekly outflow since June 27, Ministry of Finance data showed.

Long-term ‌borrowing costs in the United States, Europe, and Japan climbed to decade highs last week amid concerns over rising government debt and persistent inflation. The 10-year ⁠Japanese ​government bond yield hit ⁠a three-decade high of 2.945%.

Technology stocks Tokyo Electron and Kioxia Holdings fell 8.19% ⁠and 5.89%, respectively, while tech investor SoftBank Group shed 8.43%. The Nikkei declined ​3.93% last week. Foreign investors purchased a net 435.2 billion yen ⁠in Japanese long-term bonds after two weeks of sales. Japanese short-term bills, however, saw ⁠a ​second consecutive weekly outflow of 2.07 trillion yen.

Japanese investors sold a net 1.98 trillion yen in foreign long-term bonds and ⁠210.3 billion yen in short-term bills, the largest combined weekly net sales ⁠since April ⁠4. They sold a net 869 billion yen in overseas equities last week, their largest since June 6.

($1 = ‌159.3100 ‌yen)