TOKYO May 18 Japanese investors' appetite for
foreign bonds picked up in the latest week as they bought the
most in 10 months, reassured by the outcome of France's
Ministry of Finance data released early on Thursday showed
that Japanese investors bought a net 1.821 trillion yen ($16.40
billion) of foreign bonds in the week through May 13,
accelerating from their net purchases of 425.8 billion yen the
That marked the largest amount of foreign buying since the
first week of July last year, and the third-highest total since
MOF began compiling the data in 2005.
"Japanese investors had sold a huge amount of foreign
currency-denominated assets toward the bookclosing in March, so
this is a signal that they're coming back," said Naomi Muguruma,
senior strategist at Mitsubishi UFJ Morgan Stanley Securities.
"This is probably a reaction to the French presidential
election outcome. Japanese investors who had been on the
sidelines waiting for the result resumed foreign bond
investment," she said.
At the end of 2016, Japanese investors held 27 trillion yen
of French government bonds, or about 12 percent of the market.
They dumped a record 4.256 trillion yen of foreign bonds in
April, the first month of the Japanese fiscal year, partly
driven by anxiety that far-right candidate Marine Le Pen would
win the presidential election and trigger a plunge in French
On May 7, Emmanuel Macron defeated Le Pen in the second
round of the election to become France's president. Support for
Macron's centrist party is growing before legislative elections
next month, a poll found on Thursday, raising the chances that
he will be able to win parliamentary backing for his reform
From November to April, Japanese investors sold 8.7 trillion
yen of foreign bonds. They had been net foreign bond buyers for
the preceding 17 straight months, to the tune of more than 34
Japanese investors went on a massive foreign bond binge last
year, snapping up U.S. and European debt as the Bank of Japan's
monetary policy pushed the yields on many Japanese government
bonds (JGBs) into negative territory.
JGB yields stabilised after the BOJ unveiled its current
yield curve control policy in September. Then in November,
Donald Trump's victory in the U.S. presidential election raised
market expectations of reflationary stimulus steps, which
pressured global bond prices.
"Japanese were sellers of foreign bonds for a while, but the
French election result seems to have reassured some investors,"
said Takami Tokioka, chief portfolio manager at GCI Asset
management in Tokyo.
There are some indications that the selling continued this
week. France's seven billion euro sale of 30-year bonds on
Tuesday included orders from Japanese investors, a French debt
agency official said.
"Japanese investors traditionally don't buy in big sizes in
syndications, but we have seen a few Japanese orders in the book
for this deal. The size was in line with previous transactions,"
said Anthony Requin, chief executive of Agence France Tresor.
($1 = 111.0300 yen)
(Reporting by Tokyo markets team; Editing by Jacqueline Wong)