Foreigners rotating out of pricey Japanese exporters
Shine comes off auto and semiconductor shares as domestic stocks get a boost
TOKYO -- Overseas investors are selling expensive export-focused shares here and instead putting money into companies oriented toward the domestic market.
Recent large-shareholdings reports to the Ministry of Finance shed light on portfolio adjustments by big institutional investors from abroad.
U.S. President Donald Trump's criticism of the weak yen is clouding the outlook for Japanese businesses with high exposure to overseas markets. Concern over the proposed American border adjustment tax has prompted many to unload autoparts stocks as well.
American asset management giant BlackRock's Japanese unit cut its stake in major exhaust system supplier Futaba Industrial by about 2 percentage points to 4.46%.
Semiconductor-related shares are also under selling pressure. Wellington Management of the U.S. lowered its stake in Shinkawa by 1.64 points to 4.2%. The chipmaking equipment builder is expected to swing to the black in the current year ending March 31. But its shares are expensive, with a forward price-earnings ratio of roughly 90. "The stock appears overpriced and is prone to profit-taking," said Hirokazu Kabeya, chief strategist at Daiwa Securities.
Meanwhile, underpriced domestic-market-focused shares are attracting money from foreigners. BlackRock Japan recently became a key shareholder in bowling alley operator Round One, increasing its interest to 5.1%. Tybourne Capital Management of Hong Kong did the same with Ain Holdings, becoming a 5.2% owner of the drugstore operator.
Speculation that the yen may strengthen in response to comments by Trump and other factors is likely driving investors to domestically focused stocks, which are more insulated from the ups and downs of foreign exchange rates.