Japanese investors, while small in scale, are continuing to snap up Australian stocks.
The chart above, from Morgan Stanley’s Asia-Pacific research team, tracks net inflows and outflows of Australian dollar denominated assets.
Australian stocks are represented in blue.
As the chart reveals, Japanese investors have been net buyers of Australian stocks in nine of the past ten months.
In June inflows totalled $300 million, small compared to average daily turnover but similar to totals seen in recent history.
With sovereign bond yields creeping higher and the AUD/JPY exchange rate well-supported below the 90 level, it appears that Japanese investors, for the moment, are favouring higher-yielding Australian dollar denominated assets.