Japanese investors succeed in euro area bonds at the fastest pace in a decade

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Japanese investors sold government debts in the euro area as soon as possible in more than a decade, as analysts warned that this step by one of the home holders of housing may lead to sale in the sharp market.

Net sales by Japanese investors rose to 41 billion euros in the six months to November – the latest numbers to be issued – according to data from the Japanese Finance Ministry and Japan Bank, which Goldman Sachs collected.

Analysts say that the possibility of higher returns in bonds at home and political turmoil in Europe – including the collapse of the ruling coalition in Germany leading to the elections next month, and the turmoil in France that operate under the emergency budget law – may accelerate sales. . French bonds were the most sold during the period at 26 billion euros.

Sales add more pressure on European debt governments that are already facing a leap in borrowing costs, highlighting how High Japanese interest rates After years of negative lands reshaping financial markets around the world.

Alan Pocobza, head of allocating global assets at Société Générale, said that Japanese investors return to the homeland are “a change in the game of Japan and global markets.”

Although Japanese investors have been two net sellers in eurozone bonds in most of the past few years, the pace has increased in recent months.

Thomas in Weldik, an economist at asset manager Tr Roles, said that the Japanese investment flows were “a stable source of (European) request to the government for a long time.” But the markets now “enter a era of vigilance bonds” where “fast and violent sale” can often occur.

“The scenario has long been a source of concern for European government bond holders, given the Japanese holdings historically (among) Japanese investors” and could press the market, “said Gareth Hill, director of the bond boxes at Royal London Asset Management.

In addition, the costs of height against fluctuations in the value of the yen made external debts increasingly attractive. Despite its decrease from the peak of 2022, when the hedge costs are calculated, the Italian government bonds return for 10 years for Japanese investors is slightly more than 1 percent, which is similar to the Japanese return for about 10 years, according to Noriaatsu Tanji, the largest bond strategy in Mizuho Securities in Tokyo. He referred to regional banks in Japan as among the main sellers of European debt.

“The Japanese investors themselves are seriously asking for what extent they should carry foreign bonds,” said Andres Sanchez Balzar, head of the global bonds in Picit, the largest asset manager in Europe.

Norchekin – one of the largest institutional investors in Japan – said last year that she plans to empty more than 10 trails of foreign bonds in this fiscal year. In November, a loss of about 3 billion dollars in the second quarter recorded a loss of losses in its large property from foreign government bonds.

Analysts said that the withdrawal by Japanese investors put up bullish pressure on bond yields that have already rose up since the European Central Bank began reducing its public budget after a popular purchase program during the Corona virus.

France – which has one of the deepest bond markets in Europe, has historically witnessed the favorite candidate for Japanese investors because of the additional return it provides on the standard German debt – large large Japanese flows in recent months.

Between June and November, with a depth of a political crisis that resulted in the fall of the Michelle Parinier government, the total flows of Japanese funds amounted to 26 billion euros, compared to sales of only 4 billion euros in the same period in the previous year.

“There is no doubt that the buyer’s base has changed for France,” said Simos Mac Goran, head of international prices at JPMorgan Asset Management.

Over the past twenty years, Japanese investors have become an angle investor in many bond markets, making very low revenue at home more attractive foreign investments, including for big investors such as pension funds who need to buy safe sovereign debts.

The total foreign bond holding by Japanese institutional investors amounted to 3 trillion dollars in their climax in late 2020, according to the International Monetary Fund.

However, as Japanese investors have begun to search for returns at home, the net purchase of global debt papers has shrunk to only 15 billion dollars over the past five years – far from $ 500 billion in these purchases they made in the previous five years, according to For Alex Etra accounts, a Macro strategy in Excanti.

“While the Japanese bonds have been very attractive for local investors in the past, they are more attractive now,” said Juran from JPMorgan. “This is a structural change.”