JPY: Equity flows could turn after stimulus - Nomura

Research Team at Nomura, suggests that the recent equity flows are likely JPY positive, which could turn after stimulus.

Key Quotes

“Underperformance of Japanese equities so far this year may have generated JPY buying flows via hedging adjustments, though foreign investors have been liquidating exposure to Japanese equities. It is important for Japanese policymakers to break the vicious cycle between JPY appreciation and the decline in Japanese equity prices.

At the same time, a recovery in Japanese equity prices may cause large JPY selling flows going forward, on top of already-elevated foreign portfolio investment by Japanese investors, which would weaken JPY quickly.”