Foreign Investors Were Net Buyers of Japanese Stocks for First Time in 4 Weeks, But Trend Remains Down

For the week ending February 21st, foreign investors were net buyers of Japanese stock for the first time since the middle of January (Chart 1). The trend, however, remains that foreigners are dramatically reducing their buying of Japanese shares to the point where cumulative purchases (or sales) over the last twelve weeks is about to turn negative (Chart 2). We observe a strong correlation between the level of the JPY/USD and foreign purchases of Japanese stocks (read foreign stock sales = stronger yen). If foreigners continue to sour on Japanese stocks we would therefore expect the yen to strengthen relative to the USD.