Nonresidents Buy Stocks at Record Level

It seems foreigners are more interested in Japan’s economic recovery than even the Japanese who are seeking higher return abroad. Nonresidents bought just over 14 trillion yen worth of Japanese stocks in 2003, almost a half more than in 1999. Nonresidents were also net sellers of bonds by 1 trillion yen. For March of this year, nonresidents were net buyers of Japanese stocks for the 12 month in row, and became for the first time, net sellers of Japanese bonds, most likely projecting a rise in interest rates as Japan's economy improves. Meanwhile, Japanese investors were net sellers of foreign stocks and net buyers of foreign bonds. In the world of global finance, investors need not search for required returns at home. But if domestic markets are supported by foreign investors, what happens when those same investors seek better returns elsewhere? – YaleGlobal

Nonresidents Buy Stocks at Record Level

Tuesday, April 13, 2004

Nonresident investors were net buyers of Japanese stocks in fiscal 2003, with purchases exceeding sales by a record 14.041 trillion yen.

Finance Ministry officials said Monday that the figure was calculated from data based on settlements for the period between April 2003 and February 2004 and data based on contracts for March. In fiscal 1999, the figure was 9.967 trillion yen.

Nonresidents were net sellers of Japanese bonds in fiscal 2003 by a margin of 1.229 trillion yen.

Japanese investors were net sellers of foreign stocks, by a record margin of 317.6 billion yen. The previous record, set in fiscal 1995, was 52.8 billion yen.

They were also net buyers of foreign bonds, with buying exceeding selling by 17.163 trillion yen.

Data for March alone show that nonresident investors were net buyers of Japanese stocks for the 12th straight month, with their purchases exceeding sales by a record 2.691 trillion yen. The previous record was 1.707 trillion yen, set last July.

But they became net sellers of Japanese bonds for the first time in five months by a margin of 807.4 billion yen.

Japanese investors remained net sellers of foreign stocks for the third consecutive month, by a margin of 64.9 billion yen. They were net buyers of foreign bonds for the seventh straight month in March, with buying exceeding selling by 738.5 billion yen.

Confidence up again

Consumer confidence in Tokyo improved in March for the third straight month, reflecting brighter sentiment on employment, income growth and living standards.

The Cabinet Office's Economic and Social Research Institute said Monday that the consumer confidence index rose to 45.8 in March from 44.4 in February.

The index, calculated on the basis of a survey of 435 households conducted March 15, rose by 7 points from a year earlier for the seventh straight month of year-on-year gain.

The institute said all five indexes -- sentiment on overall livelihood, feeling about income growth, employment, inclination to purchase durable goods and inflation outlook -- improved from the previous month.

The index of sentiment on overall livelihood rose to 46.3 from 44.9 a month earlier, and that on income growth advanced to 44.8 from 43.7.

The index on the inflation outlook stood at 42.5, up from 41.1, while that on employment grew to 45.4 from 44.2. The index of sentiment on gauging consumers' inclination to purchase durable goods rose to 50.2 from 48.1.

The consumer confidence index is designed to gauge consumer expectations for the coming six months in the five categories.

It assigns points on the basis of whether consumers believe conditions in the coming six months will "improve," "improve somewhat," "remain unchanged," "deteriorate somewhat" or "deteriorate."

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