Japanese Investors Sell Foreign Stocks Amid U.S. Tariff Fears

Japanese investors heavily sold foreign stocks in the week ending February 8, ending an eight-week buying streak, as concerns grew over U.S. President Donald Trump's escalating tariff threats. According to Japan's Ministry of Finance, they offloaded 1.27 trillion yen ($8.31 billion) in foreign equities, marking the largest weekly sell-off since November 2022.

Trump’s latest tariff warnings targeted countries imposing import taxes on U.S. goods, adding to previous tariff threats against Mexico, Canada, and China. This uncertainty led Japanese investors to shift toward safer assets, investing 1.75 trillion yen in foreign long-term bonds, the highest weekly inflow since September 2024. They also bought 18 billion yen in short-term bills.

Japanese stocks also saw significant foreign outflows, with overseas investors selling 384.4 billion yen in Japanese shares, extending a two-week selling trend. Meanwhile, foreign investors pulled out 187.2 billion yen from long-term Japanese bonds, breaking a three-week buying run. However, they increased their net purchases of Japanese short-term bills by 508.1 billion yen, marking their fifth weekly net purchase in six weeks.

The shift in investment patterns highlights growing global trade uncertainties and investor caution. As U.S. trade policies continue to evolve, markets remain volatile, driving investors to safer assets.