Japanese investors sold foreign stocks in significant volumes last week, mainly due to fears over the U.S. economic outlook and escalating global tariff tensions.

Japanese Investors Pull $5 Billion from Foreign Stocks Amid U.S. Economic and Trade Concerns

According to data released Thursday by Japan's Ministry of Finance, domestic investors withdrew a net ¥752.1 billion (approximately $5.1 billion USD) from overseas equities in the week ending August 2. This marks a sharp reversal after two consecutive weeks of net buying, and reflects growing risk aversion amid volatile global conditions.

The sell-off coincided with a 2.54% drop in the MSCI World Index- its worst weekly performance in three months, fueled by a weaker-than-expected U.S. jobs report and the latest round of tariffs announced by President Trump. The new measures target dozens of countries, adding fresh uncertainty to already fragile global trade relations.

Despite this weekly pullback, Japanese investors have still poured ¥3.37 trillion into foreign equities since the start of 2025, a stark contrast to the ¥915.8 billion in net sales recorded over the same period last year.

Bond Markets Reflect Broader Concerns

Japanese investors also offloaded ¥526.3 billion in foreign long-term bonds. At the same time, foreign investors pared back their exposure to Japan's long-term bonds, though outflows eased to a three-week low of ¥87.5 billion.

Short-term Japanese bills saw a reversal, drawing in ¥1.2 trillion of foreign investment after a significant outflow of ¥1.95 trillion the week before.

Domestic Markets Attract Cautious Optimism

The Japanese stock market attracted a net foreign investment of ¥193 billion last week. While modest, this marks the sixth straight week of inflows building confidence in Japan’s economic strength.

Market Insight from SGFX

This week's sharp capital shift underscores how sensitive global flows have become to U.S. economic data and geopolitical developments. As interest rates, inflation, and trade policies evolve, investors are repositioning aggressively to manage exposure.

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