UPDATE 2-Foreign net buying of Japan shares hits record after quake

* Japanese investors net buyers of foreign assets, no
repatriation seen

* Foreign investors sell yen short-term paper

(Adds TSE’s data)

TOKYO, March 25 (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.

Tokyo Stock Exchange data, which goes back to July 1983,
showed last week that foreigners bought more than 955 billion
yen worth, the second highest after a record set in March 2004.

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
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 and Antoni Slodkowski; Editing by
Chris Gallagher)

UPDATE 2-Foreign net buying of Japan shares hits record after quake