Foreign net buying of Japan shares hits record after quake

TOKYO (Reuters) – Foreigner investors’ net buying of Japanese shares reached a record high in the week after a devastating earthquake hit Japan, Ministry of Finance data showed, while Japanese investors bought foreign bonds despite much speculation they would repatriate funds.

Overseas investors bought a net 891 billion yen ($11 billion) of Japanese stocks in the week of March 14-18, the MOF’s capital flows data showed on Friday. It was their biggest net purchase since records began in 2005.

In the first two days of the week, Japanese shares posted their biggest two-day fall since 1987 due to the nuclear crisis at a tsunami-stricken power plant, although they recovered about half of the loss later in the week.

Foreign investors have been buying Japanese shares aggressively since the fourth quarter of last year. They were net buyers in 21 of the 23 weeks before the earthquake, purchasing a net 3.1 trillion yen of shares during that period.

While fear of nuclear meltdown sent panicking investors to unwind their long position, a sharp fall in the Nikkei average (.N225: Quote, Profile, Research) also provided an opportunity for bargain hunters, with the data showing a jump in both buying and selling that week.

Both their gross buying and gross selling jumped to the highest level since August 2007, at the time of the so-called Paribas shock, and more than double the average.

Their gross buying was 9.49 trillion yen while their selling was 8.60 trillion yen.

Foreign investors sold a net 895.5 billion yen of government bills and other short-term market instruments, their biggest net selling since the final week of last year, as the yen scaled a record high against the dollar.

They bought 190.4 billion yen of Japanese bonds.

On the other hand, Japanese investors bought a net 388.1 billion yen ($4.8 billion) of foreign bonds last week.

This added to mounting evidence that Japanese investors were not selling foreign assets despite talk that Japanese insurers may be repatriating funds to prepare for large payouts after the disaster.

Such speculation helped to push the yen to a record high of 76.25 yen per dollar last week.

Japanese investors’ net buying of foreign bonds since the start of the year reached 3 trillion yen by last week, with two weeks left before the end of the quarter. That compares with net buying of 1 trillion yen in the October-December quarter.

($1 = 80.985 Japanese Yen)

(Reporting by Hideyuki Sano; Editing by Chris Gallagher)

Foreign net buying of Japan shares hits record after quake