Japanese investors increased bond purchases in February due to a fall in yields overseas, but retreated from foreign equities on concerns over U.S. President Donald Trump's tariffs plans and the potential impact on global growth from trade distortions.
Investors bought a net 3.45 trillion yen ($23.44 billion) in overseas bonds last month, marking the highest monthly purchase since August 2024. They sold 346.4 billion yen in foreign equities, Ministry of Finance data showed on Monday.
Trust accounts purchased 1.51 trillion yen worth of long-term foreign bonds, the largest amount in six months, while banks bought 913.6 billion yen in long-term debt, the data showed.
Barclays attributed February's selloff in foreign equities to a slowdown in purchases by investment trusts. These had spiked the previous month, driven by increased flows into the new Nippon Individual Savings Accounts (NISA) programme, a tax-free investment scheme.
Separately, Bank of Japan data on foreign bond holdings, also released on Monday, showed that domestic investors significantly increased their U.S. bond exposure in January, compared to the previous month.
Investors purchased U.S. bonds worth 955 billion yen in January, compared to December's net sale of 83 billion yen. Purchases of German bonds were at 544 billion yen in January versus 545 billion yen worth of net sales in December.
German bond yields have surged this month after politicians proposed a massive ramp-up in spending with plans for a 500 billion euro infrastructure fund and measures to boost the economy.
($1 = 147.2100 yen)
