Foreign investors sold Japanese long-term bonds in May on fiscal concerns, weak auctions

June 10 (Reuters) - Foreign investors were net sellers of Japanese long-term bonds for the first time in five months in May, as weak debt auctions and rising fiscal concerns dented demand for longer-dated JGBs.

Foreign investors exited a net 134.5 billion yen ($929.70 million) worth long-term Japanese bonds last month, registering their first monthly net sales since December 2024. They however, snapped up a net 193.1 billion worth of short-term bills, data from the Ministry of Finance showed on Monday.

Foreign investors sold a net 134.5 billion yen of long-term Japanese bonds in May, marking their first monthly outflow since December 2024, while purchasing 193.1 billion yen of short-term bills.

Japanese equities attracted 2.49 trillion yen in foreign inflows, following 3.68 trillion yen in April.

Meanwhile, Japanese investors bought 4.19 trillion yen of foreign bonds, the highest since August 2024, but pulled 423.7 billion yen from overseas equities, ending a two-month buying streak.

Japanese banks led the bond purchases, acquiring 2.94 trillion yen worth of long-term foreign bonds, the highest monthly amount since September 2023. Life insurers and investment trust management companies also increased their holdings, buying a net 530.9 billion yen and 251.4 billion yen, respectively.

In contrast, April data revealed the largest monthly sell-off of German bonds by Japanese investors in over a decade. This followed a spike in Germany's borrowing costs after the government overhauled its debt rules to increase public spending.

Meanwhile, Bank of Japan data released Monday showed Japanese investors purchased a net 1.9 trillion yen in U.S. stocks in April, following 2.12 trillion yen in net buying the previous month.

They also invested 725 billion yen in European equities, the highest monthly total since at least 2014. April purchases included 154 billion yen in British stocks, 142 billion yen in Spanish stocks, and 117 billion yen in German equities.

($1 = 144.6700 yen)

Foreign flows into Japanese debt securities (monthly)

Japanese investments in overseas assets (monthly)

Japanese investments in U.S. and European assets (monthly)