Japanese stocks face major foreign fund outflow ahead of US tariffs

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March 27 (Reuters) - Japanese stocks saw a significant outflow of foreign funds in the week through March 22 as investors became more cautious ahead of next week's anticipated U.S. tariff hikes and their potential disruption to Asian supply chains.

Foreigners sold Japanese stocks for an eighth consecutive week, totalling 1.21 trillion yen ($8.06 billion) last week, following net disposals of about 1.81 trillion yen in the previous week, according to data from Japan's Ministry of Finance.

U.S. President Donald Trump announced on Wednesday a 25% tariff on imported cars and light trucks starting next week, a move expected to drive up prices, hamper production, and significantly impact Japan's auto sector.

These foreign outflows last week contrasted with a 1.68% gain in the Nikkei share average, which still trades below its 200-day exponential moving average, hovering around 38,150 points.

Cross-border investors also divested Japanese bonds during the week, snapping a three-week buying streak. They offloaded 1.8 trillion yen worth of long-term bonds, marking their highest weekly net sales since December 21.

Additionally, they withdrew 713.2 billion yen out of short-term bills.

At the same time, Japanese investors scooped up about 272.1 billion yen worth of foreign stocks, registering their fifth weekly net purchase in six weeks.

In foreign bond markets, Japanese market participants shed a net 207.1 billion yen worth of long-term bonds, extending net sales into a third successive week.

($1 = 150.1400 yen)

(Reporting by Gaurav Dogra and Patturaja Murugaboopathy in Bengaluru; Editing by Sherry Jacob-Phillips)

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