BEIKOKU BANARE = QUITTING AMERICA

From The New York Times:

Many in Japan are starting to speak of “quitting America,” but they are not talking about a rise in anti-American political fervor. Rather, they mean a move away from American investments that is altering global capital flows and helping to weaken the dollar.

Japanese individuals are diverting more and more of that money away from the United States and the dollar and into higher-yielding global investments, ranging from high-interest Australian government bonds to shares in fast-growing Indian construction companies. Partly this “quitting America” — called beikoku banare in Japanese — reflects an increasing sophistication of Japan’s investors, who embraced mutual funds only a decade ago and are still learning to diversify. But it also offers one more sign that the world does not depend as much on the American economy as it once did.

In October alone, Japanese individuals pulled 33.9 billion yen, or about $300 million, out of mutual funds that invested solely in North American stocks and bonds, according to Daiwa Fund. In the same month, it said, Japanese individuals put 175.2 billion yen, or $1.6 billion, into funds investing in stocks and bonds in emerging countries.

In the last 12 months, Japanese individuals invested 1.97 trillion yen, or $17.5 billion, into emerging market mutual funds, according to Daiwa Fund, and during the same period, they removed 447 billion yen, or $4 billion, from North America-only mutual funds.

To be sure, some analysts caution that the popularity of emerging markets may prove to be a fad, especially if stock markets in China or India start falling as quickly as they rose. Analysts also say the dollar’s greater familiarity gives it an enduring appeal among many Japanese, who may return once the United States mortgage problems subside.

Some analysts predicted the eventual revival of short-term currency trading between the dollar and the yen, which had been an important support for the dollar’s value before August’s market turmoil.

“A lot of dollar-buyers are just sidelined now,” said Tohru Sasaki, chief exchange strategist in the Tokyo office of JPMorgan Chase Bank. “They’ll be back once currency markets settle down.”