Hedge funds dumped Japanese stocks at fastest pace in over 5 years- GS

Investing.com-- Hedge funds sold Japanese stocks at their fastest pace in over five years during a market rout last week, Goldman Sachs said in a recent note, with macro products making a bulk of the selling.

The selling came as Japan’s Nikkei 225 and TOPIX indexes slid over 12% last Monday and fell squarely into a bear market, amid concerns over rising Japanese interest rates and a potential U.S. inflation. 

Strength in the yen also pressured export-oriented Japanese stocks.

Hedge funds sold industrials, financials and healthcare sectors, GS said, while buying into real estate, technology, and consumer discretionaries. 

But while Japanese stocks logged steep losses at the beginning of last week, they rebounded sharply later in the week, recouping a bulk of these losses. 

The rebound was partially driven by some statements from Bank of Japan officials that they would not hike rates during times of market volatility, while bargain buying into large-cap Japanese stocks also helped. 

But while Japanese markets did recoup recent losses, sentiment towards the country remained strained, especially after the BOJ in late-July hiked interest rates and warned that it had no upper limit on how much rates could increase this year.

Future rate hikes will be largely dependent on the state of Japan’s economy. Gross domestic product data for the second quarter, due this week, is set to offer more cues on that front.