Japan: Capital starting to flow out? – RBC CM

Tonight’s MoF capital flows data are worth watching as the evidence is mounting that capital is starting to flow out of Japan, suggest analysis team at RBC Capital Markets.

Key quotes

“Last week, Japanese investors put JPY1.0trn to work in foreign bond markets and the trend has been JPY0.5trn of net investment over the last four weeks. This follows a long period of repatriation following the US election, contrary to the conventional wisdom that higher global yields were attracting Japanese investors. However, even if capital is now starting to flow outwards, this does not necessarily imply Japanese investors are selling JPY as much of that flow is likely to be currency hedged.”