Japanese Investors Getting Bullish on America Again
A more stable dollar and improved market conditions have helped lure Japanese investors away from Tokyo and back to Wall Street, although the extent of their interest isn’t known yet, financial experts say.
“They’re definitely bullish,” said Maria F. Ramirez, a managing parter for Drexel Burnham Lambert who recently returned from a business trip to Japan. “They were paring their European investments and buying (U.S.) Treasuries.”
“We’re seeing them nibbling. ‘A major shift’ may be too strong a phrase,” Raymond Stone, chief economist for Merrill Lynch Capital Markets, added Tuesday.
In recent months, the Japanese have shied away from U.S. financial markets, particularly the government bond market, where they were traditionally avid buyers due to the dollar’s steady decline on foreign exchange markets and fears of renewed inflation.
The Japanese yen has risen about 70% against the dollar in the last two years. That has made it cheaper for the Japanese to invest in U.S. securities, but those investments declined in value as the dollar fell.
The latest Treasury Department figures show that the Japanese have been selling U.S. government issues and buying corporate bonds and stocks. They had net sales of $688 million in U.S. government bonds and notes during the first quarter of this year, compared to net purchases of $1.08 billion in corporate bonds and $3.49 billion in stocks. Although more recent figures aren’t available, analysts said purchases had declined since then.
So where have the Japanese been putting all their money? In their homeland, shifting between the stock and bond markets, analysts said.
But the Japanese have been showing more interest in U.S. stocks and bonds lately because of the upturn in the dollar against most major currencies.
“The thing that has made the difference is not so much the strength in the dollar but the stability, which means that maybe future large declines don’t lie ahead,” explained Robert Brusca, chief economist for Nikko Securities International.
“What they (Japanese) like best is that losses on past holdings have stopped.”
