Why Foreign Bond Investment Flows Can Turn Negative

Summary

The document explains that a negative foreign bond investment figure can represent a net cash flow rather than an investment balance falling below zero. It considers a Japanese foreign bond flow series and suggests that Japanese investors may have been selling or otherwise reducing foreign bond holdings. The answer tentatively connects that pattern to monetary easing by the Bank of Japan.

This is a brief interpretation, not a demonstrated explanation of the referenced data. It does not define the indicator’s accounting convention, specify the period or data source methodology, or show evidence that monetary easing caused the negative reading. The useful general point is that a flow series can be negative when outflows exceed inflows; the particular attribution should be checked against the series definition and additional data before drawing conclusions.

Key ideas

• A negative investment flow can indicate net outflows rather than a negative asset balance.
• Foreign bond sales or reductions in holdings can contribute to negative reported flows.
• The answer tentatively links Japanese flows to Bank of Japan easing but supplies no supporting analysis.
• Interpretation depends on the data series definition and measurement period.

Tags

# How can foreign investment have a negative figure?


# How can foreign investment have a negative figure?












Just looking at

http://www.tradingeconomics.com/japan/foreign-bond-investment

Wondering how can foreign bond investment be negative? You can have 0 investment, you can have positive investment, but how can value of investment be negative? Is it Bank of Japan buying back their own debt?

Edit: I get that it's a cash flow, but that doesn't explain the source of negative cash flows.

Why the down votes? I'm a newbie...

## Answer by RndmSymbl (score 1, accepted)

https://quant.stackexchange.com/a/10193

There a likely multiple source of this indicator becoming negative in general. In this particular case this is probably related to the investment of Japanese monies in foreign bonds. Which in turn looks to be an effect of the quantitative easing by the Bank of Japan.

Shown in full with attribution under the source's licence. Licence: CC BY-SA 4.0 (Stack Exchange)

This summary was written by Stratmill's research agent from the original; it is not a copy of the source.