JAPAN DATA: Offshore Investors Continue To Sell Equities, But Buying Local Bonds
Offshore investors continued to sell local stocks last week. The pace was more modest compared to the prior week's outflow, see the table below. Still, we have now seen a 6 week consecutive run of net selling from offshore investors. This stretches back to the end of Jan. Over this period we have seen cumulative outflows of just over ¥3trln. Japan's tech/trade sensitive equity bourses have been under pressure, particularly through end Feb and the first part of March. We have seen some stability in recent sessions, but it is arguably too early to call a bottom in these markets.
- In the bond space, offshore investors added further to their local debt holdings. This marked the fourth straight week of inflows into this space. JGB yields continue to track higher, but may also be attracting some safe haven related flows given global/US growth concerns.
- In terms of Japan outflows, we saw net selling of offshore bonds, but this only partially reversed the prior week's purchases.
- Local investors continued to buy offshore equities, with positive net flows into this space in 12 out of the last 13 weeks.
Table 1: Weekly Offshore Investment Flows
| Billion Yen | Week ending Mar 7 | Prior Week |
| Foreign Buying Japan Stocks | -220.5 | -708.3 |
| Foreign Buying Japan Bonds | 686.4 | 776.5 |
| Japan Buying Foreign Bonds | -355.9 | 1514.2 |
| Japan Buying Foreign Stocks | 1257.4 | 626.9 |
Source: MNI - Market News/Bloomberg
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MNI: UK BRC JAN BY VALUE SHOP SALES LFL +2.5% YY, TOTAL +2.6% YY
- MNI: UK BRC JAN BY VALUE SHOP SALES LFL +2.5% YY, TOTAL +2.6% YY
UK DATA: BRC-KPMG Retail Sales: Jan Decent; 3-mma similar to Sep/Oct
BRC-KPMG retail sales increased 2.6% Y/Y in January, after two monthly prints that have been distorted by Black Friday timing (+3.2% in December and -3.3% in November).
- Smoothing out the distortion, the three months to January figures saw sales growth of 1.1%, similar to levels seen in the 3-months to October / September (1.3% and 1.2%). Also remember that this is a value rather than a volume index - so these growth numbers include inflation.
- Food sales increased 2.8% Y/Y, up from 1.7% in December, printing their highest level since August. Again - this is likely partly picking up food inflation reaccelerating.
- Non-food sales rose 2.5% Y/Y - this was higher than any other 2024 print other than the 4.4% rise in December which benefitted from the inclusion of Black Friday in 2024 (but not in the base period of 2023).
- Given the BRC follows the ONS calendar dates, it is likely ONS January retail sales will also see somewhat of a boost from what the BRC states is due to "January sales" despite "stormy weather" putting "a temporary dampener on demand". The Chief Executive of the BRC also notes sales were "also helped by the earlier start of the reporting period, adding a few more post-Christmas shopping days into the mix."
- Note the January survey data range was 4 weeks between 31st December 2023 and 27th January 2024, below the 5-week range this year. The BRC has noted it used weeks 1-5 of last year to compare for January rather than the 4-week period calculated for the January 2024 release, which should prevent any calendar skew. The ONS data is likely to already consider this through its calendar and seasonal adjustment process.
- Sales growth was recorded across nearly all categories excluding toys and baby equipment.
- Like-For-Like sales rose 2.5% Y/Y (vs 3.1% in December).
- Data covers: 29 December 2024 - 1 February 2025.
CNH: USD/CNH Holding Above 7.3100, Focus On CNY fixing
USD/CNH tracks near 7.3135 in early Tuesday dealings. Dips sub 7.3100 were supported through Monday trade. CNH lost a little ground in aggregate for Monday's session, in line with a tick higher in USD indices. Spot USD/CNY ended up at 7.3050 for Monday's session, with onshore spot losing ground in each session since markets returned from the LNY break. The CNY CFETS index tracker rose 0.18% to 100.73 (per BBG).
- The bias for market fixing estimates is likely to be skewed higher again today. The 4:30pm onshore spot close was 7.3077, and we saw generally positive USD gains against most of the majors, although nothing significant in percentage terms.
- Market focus is on this for a sign of greater comfort around yuan depreciation pressures. Yesterday's upside cap on USD/CNY was 7.3141. Expectations aren't for a sharp devaluation though. 1 month implied vol is back around 5%, close to
- For USD/CNH techs, we are holding above all key EMAs, the 20-day back close to 7.3000. Feb 4 highs at 7.3365 could be an upside focus.
- Trump tariff headlines remain in focus. Earlier Trump signed executive orders on steel and aluminium tariffs in the oval office. These will come into affect on March 4. Tariffs on autos and chips and other areas, including pharmaceuticals will be coming next Trump stated. Reciprocal tariff details will also be released in the next few days.
- On the data front, we are waiting for new loans/aggregate finance figures for Jan, which are expected to show an early year seasonal bounce.
