Bond Yield Surge Sends Foreign Investors Fleeing Japanese Stocks

Foreign investors sold Japanese stocks in record numbers last week as global bond yields surged to decade highs. According to Ministry of Finance data, foreign fund outflows from Japanese equities rose to ¥764.1 billion ($4.80 billion) in the week ended August 22, the largest weekly outflow since June 27.

The increase in long-term borrowing costs in the US, Europe, and Japan has led to concerns over rising government debt and persistent inflation. The 10-year Japanese government bond yield reached a three-decade high of 2.945% last week.

Technology stocks Tokyo Electron and Kioxia Holdings fell by 8.19% and 5.89%, respectively, while SoftBank Group shed 8.43%. The Nikkei declined 3.93% last week.

Japanese investors also sold a net ¥1.98 trillion in foreign long-term bonds and ¥210.3 billion in short-term bills, the largest combined weekly net sales since April 4.