Flash Note 13/04/2016 Last week we answered to the question: Why

Flash Note 13/04/2016 Last week we answered to the question: Why

Flash Note
13/04/2016
Alex Fusté
@AlexfusteAlex
[email protected]
Last week we answered to the question: Why
the JPY was rising? Now we answer to Who
causes this?
Look at this figure:
International transactions in Japanese securities for the
week ended 2-Apr


Domestic investors:
o Net sellers of ¥50.1B in foreign equities
o Net sellers of ¥1,555.1B in foreign long-term debt
(WOOOOW!!)
International investors:
o Net buyers of ¥415.2B in domestic equities
o Net buyers of ¥30.2B in domestic long-term debt
In summary, it is domestic (Japanese) investors themselves who
generate most of the operations of carry trade (borrowing in JPY
and invest in foreign debt –usually in EM debt-)
They repatriate investments and buy JPY (to return back their
loans) to the extent that they are frightened by the uncertain
environment, or the fears about their own economy.
We already knew that the main reason for the JPY increase was
that the carry trade strategies crumbled. But we did not know to
what extent Japanese investors were mostly those who practiced
it.
Regards
Alex Fusté
Chief Economist
Andbank
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