JAPANESE investors withdrew the biggest amount of money in 16 months from overseas bonds in February, as falling US bond yields and improving returns on domestic bonds made local debt more attractive.
According to data from Japan’s Ministry of Finance, Japanese investors exited a net 3.07 trillion yen ($19.37 billion) worth of foreign bonds last month, registering their largest monthly net sales since 6.5 trillion yen recorded in October 2024.
They divested 3.42 trillion yen worth of foreign long-term bonds, the most in 16 months, but purchased roughly 352.1 billion yen worth of foreign short-term bonds.
They bought a net 642.1 billion yen worth of foreign stocks in February, extending net purchases for a second consecutive month, with Barclays suggesting the buying was driven by NISA-related demand.
NISA, or the Nippon Individual Savings Account, is a Japanese government tax-free stock investment program for individuals that aims to turn household cash worth trillions of yen into stock market investments.
The US 10-year Treasury yield fell about 27.9 basis points last month, the most since February 2025. However, the yield has rebounded roughly 22.9 basis points so far in March as soaring oil prices stoked inflation fears.
Last month, Japanese banks divested their foreign long-term bond holdings of 3.14 trillion yen on a net basis. Life insurers and investment management companies also withdrew 618.7 billion yen and 174.7 billion yen, respectively, while trust accounts invested a net 1.22 trillion yen.
Separate reports from the Bank of Japan showed Japanese investors purchased US and European bonds worth 279.4 billion yen and 660.96 billion yen, respectively, on a net basis in January.
They bought German bonds of 355.35 billion yen and Spanish securities of 321.69 billion yen in that month.