Monday, November 16, 2015

Japanese investors selling of Australian bonds continued in September - Nomura

FXStreet (Delhi) – Research Team at Nomura, notes that according to International Transactions in Securities data, recently released by the MOF, Japanese investors were net sellers of Australian securities in September, to the tune of JPY112.2bn (AUD1.3bn).

Key Quotes

“This reflected sales of (principally) Commonwealth and semi-government bonds (of JPY139bn, or AUD1.6bn), modestly offset by purchases of equities (JPY26bn, or AUD0.3bn). This also represented a second month of net selling, and showed a faster pace of net sales over the previous month (JPY65.1bn in net selling of bonds and equities).”

“However, digging into the data a bit deeper reveals that Japanese investors were net buyers of AUD-denominated securities, including those issued outside Australia, and including AUD SSAs and Eurobonds, to the amount of JPY101.3bn (AUD1.16bn). Buying of AUD-denominated securities also represented a pick-up in net purchases from the previous month (of JPY39.3bn or AUD0.45bn).”

“Toshins would have been the main sellers, in our view. Globally, risk sentiment deteriorated through late August and September, and the speed and magnitude of the AUD/JPY fall (to around 83, from above 90) likely triggered some nervousness and sales.”

“We expect Toshins to begin buying again in the near future. Japanese investors are still concerned about the Chinese economy, but recent data suggest the Australian economy has remained fairly resilient. With AUD/JPY stabilising and moving a little higher, their interest in investing in AUD has likely increased.”
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