Japanese investors snap up foreign long-term bonds as tech stocks slide

Japanese investors bought foreign long-term bonds for the first ​time in seven weeks in the ​week ended October 31, opting for ‌safety ​amid a selloff in technology stocks and after the Federal Reserve held interest rates steady. These investors shrugged off earlier concerns about ‌rising energy costs and government debt as the AI trade slipped over disappointing earnings from some top companies.

Traders were watching for signs that enough money was returning home to move Japan's domestic and ‌foreign markets. Japanese investors bought a net 1.31 trillion yen ($8.31 billion) of foreign long-term bonds after ‌withdrawing a combined 3.51 trillion yen over a six-week selling streak, data from Japan's Ministry of Finance showed. They, however, sold a net 209.3 billion yen of foreign short-term bills.

At the same time, foreign investors poured 2.36 ⁠trillion yen into ​Japanese bonds, the ⁠largest amount since March 21. They bought 1.48 trillion yen in long-term bonds and 874.7 billion yen in short-term bills. The ⁠US tech-heavy Nasdaq Composite Index fell 2% last week after Amazon.com and Alphabet reported sharp cash outflows, while ​Intel warned that it would burn cash this year.

The Nasdaq fell a further 5.52% ⁠on Thursday amid fears of tougher AI regulation after Democrats won control of the US Congress. The Nikkei has lost ⁠about ​6.14% so far this week. Japanese investors have still withdrawn a net 4.38 billion yen from foreign fixed-income instruments so far this year, the largest outflow for the same period since ⁠2022.

In equities, Japanese investors bought a net 1.08 trillion yen worth of foreign stocks last week, ⁠extending their streak of weekly ⁠net purchases to three consecutive weeks. Foreign investors also bought a net 1.13 trillion yen worth of Japanese stocks last week, remaining net buyers ‌for a ‌second consecutive week.

($1 = 157.6900 yen)