Foreigners sold Japanese stocks last week as Nikkei hit a record

FOREIGN investors took profit from Japanese stocks last week as the Nikkei 225 Stock Average hit an all-time high, turning net sellers for the first time since December.

Overseas investors sold a net 78.7 billion yen (S$706.5 million) of cash equities, while domestic investors including individuals and institutions offloaded 479 billion yen, according to data from Japan Exchange Group. Brokerages bought the most stocks through their proprietary accounts, according to the bourse operator.

“Foreigners have been the main source of Japan’s re-rating, so if they stopped buying, there is no upside to Japanese stocks,” said Amir Anvarzadeh, a strategist at Asymmetric Advisors. That’s especially the case for exporters, and the tech and auto sectors, which overseas investors love, Anvarzadeh said.

The Nikkei 225 Stock Average climbed 1.6 per cent last week, surpassing its 1989 peak. The gauge has surged 42 per cent over the past year on prospects of higher shareholder returns, a weaker yen, signs of moderate inflation and booming corporate profits.

“It’s rather natural to see some profit-taking when the market hits a new high,” said Naka Matsuzawa, chief strategist at Nomura Securities. Speaking to European investors, “I found many of them are still left behind of the rally and waiting to buy on the dip,” Matsuzawa said. “That said, we perhaps need a driver for the market to keep rising, other than the weaker yen.” BLOOMBERG