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Investing.com -- Japanese equity funds experienced their largest weekly outflows in nearly 18 years in the week leading up to May 28. This comes as investors either took profits following a rally driven by easing U.S.-China trade tensions or became wary of earnings potential.
Data from LSEG Lipper reveals that Japanese equity funds registered net outflows of $7.49 billion, marking the most substantial weekly withdrawal since July 4, 2007.
Analysts suggest that some of these outflows could be due to rebalancing by Japan’s large life insurance and pension firms. These firms may be selling rising stocks and purchasing bonds to maintain asset ratios.
The yen’s appreciation against the U.S. dollar has also been a factor, with a 10% increase so far this year. This could potentially diminish export profitability. LSEG data indicates that over the past 30 days, analysts have lowered forward 12-month earnings estimates for Japanese firms by 1.8%.
According to the Lipper data, domestic investors were responsible for almost all of the outflows, with $7.55 billion withdrawn from local funds. In contrast, foreign funds saw $59 million in net inflows.
The Daiwa iFreeETF TOPIX, Nikko Listed Index Fund TOPIX, and Nomura NF TOPIX ETF experienced the largest outflows during the week. They reported redemptions of $2 billion, $1.92 billion, and $1.61 billion, respectively.
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