Overseas investors buy over $7bn in Japan stocks in week

 

Buffett effect: Overseas investors buy over $7bn in Japan stocks in week

Financier's remarks, easing bank turmoil spur highest net purchases in 9 years

 Overseas investors bought a net 1.05 trillion yen ($7.83 billion) in Japanese stocks during the five trading sessions through April 14 as billionaire investor Warren Buffett signaled his confidence in the market.

In an interview with Nikkei on April 11, Buffett said that his Berkshire Hathaway had increased its stake in five leading Japanese trading houses. He said he intends to add to his investments in Japan.

The comments helped fuel greater interest in Japanese equities. The latest weekly tally was the largest since November 2013, when quantitative and qualitative easing by the Bank of Japan weakened the yen, spurring hopes for a recovery among Japanese corporations.

This marked the third week in a row of net purchases by overseas investors, with more unwinding their short positions as turmoil in the U.S. and European banking sectors settles down. Overseas investors bought a net 1.73 trillion yen in Japanese equities over the entire period.

They have also turned net buyers on a year-to-date basis, by more than 170 billion yen.

"Long-term investors are snapping up cash equities, partly thanks to moves by the Tokyo Stock Exchange," said Takayuki Ishibashi, a vice president at Goldman Sachs Japan. The TSE is urging listed companies with price-book ratios under 1 -- which mean that they are trading below their book value -- to bolster capital efficiency.

"Investors overseas often tell me that they see the Japanese economy to be more stable, given rising interest rates and inflation in the U.S. and Europe," said Kei Okamura, a portfolio manager on the Japanese-equities team at Neuberger Berman. The asset management firm upgraded its view on Japan equities from "neutral" to "overweight" on valuations in its latest asset allocation strategy, published Tuesday.

Okamura also attributed the growing purchases partly to Buffett's bullish outlook on Japan.