Foreign capital outflows from the Japanese stock market reach a nearly two-month high as soaring global bond yields pressure technology stocks

(1) As of the week ending August 22, foreign investors had a net sale of Japanese stocks totaling 764.1 billion yen (approximately $4.80 billion), marking the largest single-week outflow since the week ending June 27. (2) The main reason for the capital outflow was concerns over government debt and persistent inflation, which pushed long-term borrowing costs in the US, Europe, and Japan to multi-decade highs last week, placing valuation pressure on growth sectors such as technology stocks. (3) In the bond market, foreign investors switched to a net purchase of 435.2 billion yen in Japanese long-term bonds (following two consecutive weeks of net selling); meanwhile, Japanese short-term treasury bills saw net outflows for the second straight week, reaching 2.07 trillion yen. In addition, Japanese investors last week had a net sale of overseas stocks amounting to 869 billion yen, the largest since the week ending June 6.