March 25 (Bloomberg) -- Foreign investors bought a record amount of Japanese stocks last week after the nation’s equities markets tumbled in the wake of the March 11 earthquake and resulting nuclear accident.I would like to reiterate the question that I asked yesterday: Do you see any panic?
Foreign investors bought 891 billion yen ($11 billion) in Japanese stocks in the week through March 18, the most since comparable records began in 2005, according to the Ministry of Finance in Tokyo. Looking at comparable data, this is “substantially the most on record,” said Yoshihito Hidaka, an official at the Ministry of Finance.
“For foreigners like us, the reason we bought Japan is mainly because investors overreacted and it was oversold,” said Alex Au, managing director in Hong Kong of Richland Capital Management Ltd., which oversees $300 million of assets. “That doesn’t mean we’re actually bullish on the outlook for Japan. We are just selectively buying stocks that were oversold and will benefit.”
“Foreigners are probably not necessarily bullish, but are thinking they can buy some cheap stocks at that moment,” said Richland’s Au, who increased his exposure to Japanese stocks to 15 percent from between 5 percent and 10 percent before the quake. “I won’t be surprised if the market bounces back to the pre-quake level as they unload their positions.”
Au bought shares that may benefit from rebuilding, including Komatsu Ltd. and Nippon Steel Corp., Japan’s largest steelmaker, as well as Takeda Pharmaceutical Co. He said he sold Japanese financial stocks because of their risk amid increasing bad debt.
Foreign investors bought 955 billion yen more Japanese stocks than they sold last week, the most since March 2004, according to data from the Tokyo Stock Exchange today. Foreign institutional investors, who represent 70 percent of stock trading in Japan, were weekly net buyers of the nation’s stocks from Oct. 29 through March 18, according to data compiled by Bloomberg. That’s the longest streak since the 26 weeks through Dec. 9, 2005.
“Reactions from overseas I got through exchanging e-mails after the quake were surprisingly positive,” Tokyo Stock Exchange Group Inc. President Atsushi Saito said at a regular press briefing on March 22. Overseas investors had been net buyers of shares on the exchange during the March 14 and 15 rout, Saito said in a note on the bourse’s website on March 15.
Additionally, I would like to mention that foreigners buying sprees generally constitutes a good contrarian indicator as they are the people who know the less — and in case of a remote and culturally closed country like Japan, they probably know nothing — and always arrive last for the deals.
Tiho over at TheShortSideOfLong has posted this remarkable Barron's cover — Barron's Magazine being one of the best contrarian indicators available:
In case also you thought the worst is behind us, and the fundamentals are bright, a couple of interesting reports follow.
Reactor Core May Be Breached, Leaking Radiation
March 25 (Bloomberg) -- Japan’s nuclear regulator said one reactor core at the quake-damaged Fukushima Dai-Ichi power plant may be cracked and leaking radiation.ZeroHedge reports:
"It’s very possible that there has been some kind of leak at the No. 3 reactor," Hidehiko Nishiyama, a spokesman at the Japan Nuclear and Industrial Safety Agency said in Tokyo today. While radioactive water at the unit most likely escaped from the reactor core, it also could have originated from spent fuel pools stored atop the reactor, he said.
Tokyo Electric plans to drain radioactive water from the turbine building of the No. 3 unit where the accident occurred, spokesman Osamu Yokokura said. It has yet to determine how and when to do this, he said.
Exposure to radiation from cesium-137 increases the risk of cancer, and high doses can cause serious burns and death, according to the U.S. Environmental Protection Agency.
Wind will carry the radionuclides for a “short while” inland, the center said on its website. Reactors at Fukushima may have released as much as 20 percent of the radioactive iodine and up to 60 percent of the radioactive cesium that resulted from the Chernobyl meltdown in 1986, according to the report yesterday.
The maximum radiation reading reported so far at the nuclear plant is 500 millisieverts per hour, meaning a worker in the vicinity would receive the maximum-allowed dose in 30 minutes.
According to Asahi Shimbun which is quoting the Japan NRC, the Fukushima event has just surpassed Three Mile Island in terms of seriousness, and has been upgraded from Level 5 "Accident with Wider Consequences" to Level 6 "Serious Accident." Only Chernobyl is a Level 7 event. We believe Fukushima should get there within 2 weeks as ever more of the current devastation becomes public. Of course, all of this is a paper-pushing formality. What isn't, are people who may be developing serious diseases as the government continues to misrepresent the severity of the situation.