Net selling of Japanese cash stocks by foreign investors last week hit their highest since Black Monday in October 1987, as they unloaded riskier assets spooked by extreme volatility in the market, exchange data showed. Foreigners, who were also net sellers in the previous four weeks, sold a total of 1.034 trillion yen ($8.6 billion) worth of Japanese cash stocks during the week of September 7-11.
Data by the Japan Exchange Group on Thursday showed it was the biggest weekly selling since Black Monday - an event that marked the start of a global stock market decline. Last week saw huge volatility in the market due to short-covering after investors accumulated massive short positions. Last Tuesday, the Nikkei share average wiped out all of its year-to-date gains before it rebounded 7.7 percent for its biggest single-day gain in nearly seven years the next day.
Foreigners were on edge due to worries about a slowdown in Chinese growth and its impact on the global economy, while the outcome of this week's Federal Reserve meeting in which US rates may be raised, also weighed on sentiment. "A lot of foreign investors reduced their long positions in Japanese stocks spooked by extreme volatility," said Yutaka Miura, a senior technical analyst at Mizuho Securities. "The Japanese market became a good target to sell because it was one of the few markets which had sustained gains this year."
Foreigners sold a net 71.6 billion yen in futures during the last week, bourse data showed. Conversely, trust banks, which manage corporate pension trusts and national pension fund trusts, bought a net 202 billion yen in Japanese cash stocks. They were net buyers of Japanese cash stocks for the third consecutive week. The Nikkei ended 1.4 percent higher at 18,432.27 on Thursday.