By Gaurav Dogra

(Reuters) – Japanese investors sold nearly twice as much overseas debt in February than they did in the past two years due to concerns about monetary tightening and the escalation of the Russia-Ukraine war.

Japan’s Ministry of Finance reported that domestic investors have sold overseas bonds worth 3.2 trillion Japanese Yuan ($27.64 Billion), the largest since April 2020.

They also bought foreign stocks worth 322 trillion yen.

Title: Japanese investments in overseas assets, https://fingfx.thomsonreuters.com/gfx/mkt/znpnenqqqvl/Japanese%20investments%20in%20overseas%20assets.jpg

BoFA stated in a report that “Bank accounts sold foreign securities in February”, likely due to unwinding of position in the first half, as global yields rose prior to falling following the Ukraine shock.”

“It’s also true that Japanese bonds bear-steepened a lot in February and reduced relative attractiveness of foreign bonds as there are growing concern over policy change at the BoJ,” said Naka Matsuzawa, chief Japan macro strategist at Nomura.

Foreign bonds and equities sales in the first 2 months of 2011 totalled 2.46 trillion yen. That’s more than half of last year’s total of 1.5 trillion.

Haruhikokuroda, Bank of Japan Governor on Tuesday said that it was unlikely the Bank of Japan would tighten monetary policy or pull out stimulus. This despite growing expectations that consumer inflation would approach 2% as soon as next month.

Bank of Japan data showed that Japanese investors had purchased U.S. securities in the US worth 172 Billion yen and then sold U.S. stocks for 282 billion. The European Union saw them purchase 1.19 trillion yen of bonds and sell 199 billion in equities.

Title: Japanese investments in US and European assets, https://fingfx.thomsonreuters.com/gfx/mkt/jnvwebkkzvw/Japanese%20investments%20in%20US%20and%20European%20assets.jpg