Foreign Investors Dump Japanese Stocks by Largest Amount on Record

For the week ending March 14th, foreign investors in Japanese stocks were net sellers by the largest single-week amount since weekly records began in 2001. This is concerning not only because of what it implies for the Nikkei (2nd chart), but also because of what it implies for the yen (i.e. a strengthening relative to the USD) (3rd chart). In a somewhat roundabout way, the yen usually strengthens as foreign investors sell Japanese stocks because they are doing so to express a more cautious sentiment. The flight to safety bid in the yen therefore outweighs the weakness one would expect if investors were to sell their Japanese equity holdings and then convert the proceeds back to US dollars.