Japanese Capital Exports through Portfolio Investment in Foreign Securities

Abstract

As a component of Japan’s total capital exports, portfolio investments in foreign securities continue to occupy a major portion. However, in 1987, the relative weight of the private sector’s investments in foreign securities declined and this change in the composition of Japanese capital exports was one of the major factors which caused the turmoil in world financial markets. In this context, the future development of Japanese portfolio investment in foreign securities is a public policy issue of great importance. The purpose of this paper is to make clear the recent behaviour of Japanese institutional investors in this field which should have deep relationships with the change in the Japanese financial system.