Japanese investors turn buyers of foreign bonds in August driven by higher yields

Sept 8 – Japanese investors chose foreign bonds over equities in August, as yields surged and global stocks declined on fears that higher interest rates could prevail for longer than expected.

They purchased 1.76 trillion yen (USD 11.95 billion) worth of long-term foreign bonds on a net basis last month after selling about 1.64 trillion yen in July.

Japanese insurers were net buyers of foreign debt for the first time in four months, with purchases to the tune of 2.32 trillion yen. Bankers also accumulated about 370.3 billion yen of overseas bonds last month.

Last month, US Treasury yields climbed to their highest in 16 years on expectations of an extended period of high interest rates after US jobs and consumption data pointed to a surprisingly resilient economy.

Japanese investors, however, exited about 112.1 billion yen of foreign equities in August, marking their second monthly net selling in a row.

As per the data, as of July, Japanese investors had poured a net 14.01 trillion yen into U.S. bonds this year, while withdrawing about 1.33 billion yen from European debt securities.

(Reporting by Gaurav Dogra and Patturaja Murugaboopathy in Bengaluru; Editing by Simon Cameron-Moore)