Forex Flash: Large net selling continued but toshin momentum recovered - Nomura

FXstreet.com (Barcelona) - Nomura strategist Yujiro Goto notes that large net selling continued, but toshin momentum recovered in March.

He begins by commenting that Japanese investors sold foreign securities of the value of USD 14.7bln in March, according to the MOF and even though the pace of selling slowed from February, significant selling continued. He feels that much of the selling came from pension funds which sold JPY2132bn of foreign securities. In particular, he flags that pension funds (i.e. trust accounts of the banking sector) accelerated their liquidation of foreign equities to JPY1611bn from JPY1076bn the previous month.

He writes, “Pension funds have been selling foreign securities to rebalance their portfolios amid JPY weakness. They have been shifting their money from foreign assets and domestic equities into domestic bonds, in our view. Their selling of foreign securities slows JPY weakness but will not change the trend, as their selling is motivated by JPY weakness. Their selling is expected to slow if JPY weakness slows.”