Japanese Investors Foreign Asset Sell-off December 2025 Analysis

The great repatriation has begun. According to Reuters, Japanese investors offloaded a significant amount of foreign assets in December 2025. This massive move signals a shift in sentiment as institutional players bring capital back to domestic markets.

Understanding the Japanese Investors Foreign Asset Sell-off

During December, Japanese banks and insurers became net sellers of foreign bonds and equities. The primary driver appears to be the narrowing yield gap between Japan and the rest of the world. As the Bank of Japan (BoJ) pivots toward a more hawkish stance, the incentive to hold riskier overseas debt is diminishing—especially when currency hedging costs remain high.

The scale of this sell-off is not just a year-end anomaly. Japan remains the world's largest creditor nation, and any sustained repatriation of funds can create significant tremors in the U.S. Treasury market. Analysts are closely watching whether this trend will accelerate in early 2026.