Foreign investors no longer under Abenomics spell
With fund inflows down 94 per cent from last year's record bets on Japanese shares, overseas players want action beyond monetary easing
Foreign investors have had just about enough of Abenomics.
After pumping record amounts of cash into Japanese shares last year, they have hardly added holdings this year. Inflows were down 94 per cent to 898 billion yen (HK$57.9 billion) as of December 19, on pace for the smallest annual amount since the 2008 global financial crisis.
April last year alone registered almost three times as much foreign investment in the stock market as all of this year.
These figures provide the clearest look at how global investors have become disillusioned with Prime Minister Shinzo Abe after he pushed through a tax increase in April that sent Japan into recession.
Fund managers say that to lure investors back, Abe needs to move beyond short-term stimulus and start enacting the structural changes he laid out in his initial plan, dubbed Abenomics, to end Japan's two-decade economic malaise.
"We need to see a framework where growth isn't dependent on monetary easing," said Ayako Sera, a strategist at Sumitomo Mitsui Trust. "If not growth, then at least a way to increase productivity. For now, there's nothing like that, so I imagine it'll be hard for stocks to keep going higher and for foreigners to take an interest in them."
Purchases of Japanese shares in the year to December 19 by investors outside the country were less than a tenth of the 15.1 trillion yen they bought last year, according to data from the Tokyo stock exchange. Trust banks, which typically trade on behalf of pension funds, added 2.7 trillion yen, after offloading about 4 trillion yen of equities last year. Individuals were net sellers for a fourth straight year.