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Profit-taking continues in toshin market, but at a slower pace – Nomura

FXStreet (Barcelona) - Yujiro Goto, Research Analyst at Nomura, notes that profit-taking continued in the toshin market as retail investors continued selling foreign assets amid JPY weakness.

Key Quotes

“Retail investors continued selling foreign assets via toshins last week, for the third week in a row. They sold JPY55bn ($0.5bn) of foreign securities via toshins, a much smaller amount than the previous week (-JPY359bn).”

“The pace of daily selling slowed to just JPY1bn ($5mn) last Friday, after reaching JPY177bn on 7 November.”

“After the announcement of additional easing by the BOJ and the new target portfolio of the GPIF on 31 October, retail investors took profits aggressively amid JPY weakness. However, the pace of profit-taking is now slowing.”

“Even though toshin momentum slowed recently owing to aggressive profit-taking, we do not expect weak momentum to continue. We expect retail investors to resume purchasing foreign assets via toshins, partly owing to the expected accelerated demand before year-end to benefit from the NISA.”

“In the currency selection-type toshin market, retail investors are estimated to be net sellers to the tune of JPY20bn ($0.2bn), for the fourth week in a row. They sold JPY10bn ($0.1bn) of USD, while also selling AUD (-JPY6bn), MXN (-JPY3bn), and BLR (-JPY2bn).”

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