Information released Thursday by the Japanese Ministry of Finance showed that overseas investors left the Japanese equities markets in larger numbers last week than they entered it for the first time since September, and indications are that this will be the case this week as well. If this turns out to be the case, it will be the first time since last April that foreign investors have been net sellers of Japanese equities for two weeks in a row.
Data for the week ending February 11 showed that foreign investors sold a net ¥252.9 billion ($2 billion) in Japanese shares, the largest amount of foreign selling since June 2005. Information so far this week has shown net foreign selling so far every day this week.
Despite what appears to be a new trend, sparked by Morgan Stanley’s opinion last week that the rally in Japan’s market had ended, there is still optimism about the market in Japan. UBS put much of the selling to profit taking from hedge funds, and even though it cut Japan’s weighting in its global equity portfolio to “neutral” from “overweight”, one strategist insisted that he was still enthusiastic about the Japanese market. Another analyst, for Profit Research Centre, said that even if the Japanese market falls further, that could attract the interest of some hedge funds.
