JAPAN DATA: Offshore Investors Continue To Return To Local Stocks
Japan weekly investment flows saw continued net buying of local stocks by offshore investors. In the past two weeks, this investor has bought over ¥4.3trln of local stocks, partially reversing the recent outflows seen since mid August. This follows the break higher in local stock indices in recent weeks, led by tech optimism/and yen weakness. These trends have faltered somewhat though in recent sessions. Stocks bourses in Japan remain close to recent record highs, with offshore investors still likely to be overweigh given aggregate inflows in the past 6 months.
- Offshore investors continued to buy local bonds, after strong inflows in the prior week. Still, aggregate inflows are only marginally positive for recent months.
- In terms of outbound Japan flows, we saw local investors buying bonds, although only partially reversed the previous week's net selling. Global bond returns have firmed this week, given downside in US Tsy yields (break 4.00% on the 10yr).
- We also saw buying of offshore stocks, but local investors remain cautious on global stocks, with cumulative outflows seen in recent weeks.
Table: Japan Weekly Offshore Investment Flows
| Billion Yen | Week ending Oct 10 | Prior Week |
| Foreign Buying Japan Stocks | 1885.0 | 2476.1 |
| Foreign Buying Japan Bonds | 199.4 | 1258.6 |
| Japan Buying Foreign Bonds | 596.4 | -923.0 |
| Japan Buying Foreign Stocks | 59.3 | -1450.2 |
Source: Bloomberg Finance L.P./MNI
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US TSYS: Cash Open
TYZ5 is trading 113-17, down 0-00+ from its close.
- The US 2-year yield opens around 3.501%.
- The US 10-year yield opens around 4.028%.
- MNI BRIEF: Miran Sworn In As Fed Board Governor By Judge. White House economic adviser Stephen Miran was sworn in Tuesday as a member of the Board of Governors of the Federal Reserve System, just before the start of a Federal Open Market Committee meeting that is expected to end in an interest rate cut.
- (Bloomberg) -- Bond traders are stepping up options wagers that the Federal Reserve will deliver at least one half-point interest-rate cut across this year’s three remaining policy meetings
- 10-Year Yields continue to do work just above 4.00% as the market looks towards the FOMC tomorrow morning. The first buy-zone is now back towards the 4.20% area where I suspect decent demand should return initially. A sustained break through 4.00% is needed for the focus to then turn towards the 3.80% area. The market does seem confident and is pricing in a dovish outcome, the risk is Powell does not deliver.
- Data/Events: MBA Mortgage Applications, Housing Starts, FOMC Rate Decision
MNI: JAPAN AUG EXPORTS -0.1% Y/Y; JULY -2.6%
- MNI: JAPAN AUG EXPORTS -0.1% Y/Y; JULY -2.6%
- JAPAN AUG EXPORTS POST 4TH STRAIGHT Y/Y DROP
ASIA STOCKS: South Korea and Taiwan Inflow Surge Resumes
South Korea, along with Taiwan, were the standouts from an offshore equity flow standpoint yesterday. After a slower inflow backdrop on Monday, inflows surged yesterday amid both buoyant global and local equity market trends. The Kospi and the Taiex both rose over 1% to fresh cycle highs in Tuesday trade. Overnight saw softness, particularly in EU stocks, but the SOX positive momentum continued. Near term focus will rest with the Fed tone, particularly Fed Chair Powell's outlook for further rate cuts in terms of timing and size, post a likely easing later on Wednesday US time.
- For South Korea, via BBG: "Top net-buying by foreign investors: Samsung Electronics, Doosan Enerbility, SK Hynix, HJ Shipbuilding, Hanwha Aerospace", whilst Taiwan's inflows for Sep to date are now above $8bn, close to fresh cycle highs.
- Elsewhere, flows trends were mixed. India reverted back to modest outflows on Monday, while the 5-day sum is moderately positive.
- Indonesia saw small outflows yesterday, with today's BI decision coming into focus. Onshore demonstrations may also unfold today.
- Thailand saw better inflows yesterday, but the 5 day sum remains close to flat. Also note, Malaysian markets return today.
Table 1: Asian Markets Net Equity Flows
| Yesterday | Past 5 Trading Days | 2025 To Date | |
| South Korea (USDmn) | 1145 | 3677 | -1007 |
| Taiwan (USDmn) | 864 | 4663 | 8413 |
| India (USDmn)** | -38 | 266 | -15447 |
| Indonesia (USDmn) | -23 | -52 | -3687 |
| Thailand (USDmn) | 39 | 15 | -2503 |
| Malaysia (USDmn)* | 55 | 53 | -3753 |
| Philippines (USDmn) | -1 | -2 | -736 |
| Total (USDmn) | 2041 | 8621 | -18720 |
| * Data Up To Sep 12 | |||
| * Data Up To Sep 15 |
Source: Bloomberg Finance L.P./MNI
