Japan sells foreign stocks in April amid inflation worries

Japanese investors became net sellers of foreign stocks in April for the first time in four months, as concerns over rising energy costs linked to the Iran war and broader inflation risks weighed on sentiment toward overseas equities.

Data released by Japan’s Ministry of Finance on Wednesday showed that investors sold a net 636.4 billion yen ($4.04 billion) worth of foreign stocks during the month.

The figure marked the largest monthly net sale since October 2025.

The shift in investor sentiment came amid growing concerns over inflationary pressures globally.

Market participants remained cautious as higher energy prices and rising living costs continued to affect economic expectations.

Foreign stock selloff hits multi-month high

The Ministry of Finance data showed that Japanese investors sharply reduced their exposure to foreign equities in April after several months of net buying activity.

The selloff reflected growing uncertainty in overseas markets, particularly as investors monitored inflation developments and geopolitical tensions.

Japanese investors also reduced their holdings of foreign bonds during the month.

However, the pace of selling slowed significantly compared with previous months.

Net sales of foreign bonds stood at 219.2 billion yen in April, marking the lowest monthly level in three months.

The moderation in bond selling suggested that investors remained selective in adjusting overseas portfolios despite broader caution in global financial markets.

US inflation data adds to investor caution

Investor concerns intensified after fresh inflation data from the United States pointed to accelerating price pressures.

According to data released by the US Labor Department on Tuesday, US consumer inflation increased at the fastest pace in three years in April.

Prices rose across several categories, including food, services, rental costs, and airline fares.

The inflation figures reinforced concerns that persistent price increases could continue to pressure global financial markets and weigh on investor appetite for risk assets.

Trust accounts lead foreign equity withdrawals

The Ministry of Finance data also showed varying investment patterns among different categories of Japanese investors.

Japanese trust accounts pulled out 1.85 trillion yen from foreign stocks during April.

The figure represented the biggest monthly net withdrawal since June 2025.

Despite selling foreign equities, trust accounts invested 897.3 billion yen into foreign long-term bonds during the month.

Meanwhile, investment trust management companies and life insurers remained net buyers of overseas stocks.

Investment trust management companies purchased foreign equities worth 1.25 trillion yen, while life insurers bought 333.1 billion yen in overseas stocks.

The contrasting investment activity highlighted differing approaches among institutional investors toward overseas markets amid rising economic uncertainty.

Japanese investors reduce US and European bond holdings

Separate data from the Bank of Japan showed that Japanese investors also reduced holdings of overseas bonds during the first quarter.

According to the report, investors sold US bonds worth 4.95 trillion yen and European bonds worth 1.02 trillion yen during the quarter.

Within Europe, Japanese investors sold French bonds worth 797.66 billion yen and German bonds worth 307.65 billion yen.

The data indicated that Japanese investors broadly reduced exposure to overseas fixed-income markets as global inflation concerns and market uncertainty persisted.