The Rate at Which Foreigners are Dumping Japanese Stocks is Slowing

Foreigners have been net sellers of Japanese stocks in 2014 but that trend may have seen its climax. Data released today showed that foreigners were actually net buyers of stocks for the week ending April 18th, which marks the second week of net buying out of the last three. Importantly, when we calculate the 12-week moving average of net foreign purchases of Japanese stocks (second chart), we see that the selling trend seems to have reversed such that foreigners are at least not selling as quickly as a few weeks ago. As we can see from the chart below, the changes in the direction of the trend often (but not always) coincide with peaks and troughs in 1-quarter performance of the Nikkei Index.