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Investors retreat from Japan stocks on trade, tax concerns

TOKYO, June 25 (Reuters) – Investors are pulling money out of Japan’s underperforming stock market, worried that constraints on further economic stimulus make the country more vulnerable than others directly in the firing line of the Sino-U.S. trade war.

The heavy portfolio outflows from foreign and domestic investors in the six weeks since U.S.-China trade talks broke down could curtail a rising yen, which has been pushed higher by a flight to safety due to heightening worries over trade, global growth and tensions in the Middle East.

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Japan’s stock market is Asia’s second-worst performer after South Korea’s, suffering the impact of slower global trade and sluggish domestic demand.

Investors say even China, whose stock markets are Asia’s best performing this year, offers better opportunities as there are companies there not directly affected by U.S. tariffs or those that will benefit from government efforts to support the economy.

Companies across Japan, from factory automation equipment makers and robot manufacturers to shippers, are reliant on China, said Norihiro Fujito, Tokyo-based chief investment strategist at Mitsubishi UFJ Morgan Stanley Securities, while explaining the weakness in markets and flagging business confidence.

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