Foreign investors sold off Japanese stocks for a fifth week, marking the longest selling streak since March last year, when Japanese stocks were poised to begin their historic rally.
They sold a net ¥21.4 billion ($133 million) in cash shares in the week ended June 21, according to data from Japan Exchange Group. The country’s shares fell over the period as political risks in Europe weighed on sentiment. Domestic retail investors bought ¥190 billion worth of shares, the third week of net buying.
There are signs that global investors are becoming more cautious about the country’s shares as the yen’s decline extended to a 38-year low. While the currency’s depreciation has previously provided a boost to exporters, its brutal decline is raising concerns that it could hurt Japan’s economy. The weak yen is also eroding the value of foreign investors’ dollar assets.
Political uncertainty in Europe is dampening risk appetite as elections in France and Great Britain approach. This also underlines the concerns about the American presidential elections.
“Foreign investors are taking a wait-and-see approach to political concerns,” said Kohei Onishi, senior investment strategist at Mitsubishi UFJ Morgan Stanley Securities. “They may not become big buyers of Japanese stocks in the short term.”
Foreign investors were net sellers of Japanese stocks for five weeks through March 24 last year. They then turned to improving shareholder returns, growing corporate profits and getting support from Warren Buffett, pushing the Nikkei average of 225 issues to a record high earlier this year.
