(Bloomberg) -- Foreign investors sold the most Japanese equities since March 2019 last week as the Topix index reached a fresh multi-decade high. 

They offloaded a net ¥1.58 trillion ($10.7 billion) of stocks, almost double the amount the previous week, data from the Ministry of Finance showed.

“Investors who bought Japanese stocks from the beginning are taking profit,” amid concerns about interest rates moving higher, said Ikuo Mitsui, a fund manager at Aizawa Securities Co. “Globally, there’s a move to slightly lower risk-weighted assets.” 

Overseas buyers dumped Japanese equities as the benchmark Topix index reached the highest since 1990, according to the finance ministry. Figures from the Japan Exchange Group Inc. meanwhile showed foreign investors sold a net ¥278.1 billion in cash equities, while they purchased ¥817 billion in futures.

The discrepancy between the two sets of data may be coming from foreign institutions’ cross-border, over-the-counter transactions between their own accounts for arbitrage, cost and tax purposes, according to Takehiko Masuzawa, head of equities trading at Phillip Securities Japan Ltd. 

An arbitrage of this type that typically happens in March and September can contribute to large net sales, Masuzawa said. The finance ministry’s data includes OTC trading, while the JPX only accounts for exchange-traded transactions including futures, according to the bourse.

Some major global investors, including Warren Buffett became more bullish earlier this year, helping kick off a rally in Japan stocks amid signs that inflation would take hold and optimism about corporate governance reforms. 

Sustainable and stable inflation, accompanied by wage growth, isn’t in sight yet, Bank of Japan Governor Kazuo Ueda said at a press briefing Friday after the central bank left its ultra-easy stance unchanged. That damped market speculation of a near-term interest-rate hike that had pushed up Japanese bond yields in recent days.

The prospect of higher interest rates stands to help financials though by boosting profits from lending, and energy companies are also benefiting from rising oil prices. 

Bank of America Corp.’s latest global fund manager survey showed investors are still bullish on Japan, while BlackRock’s Investment Institute further upgraded its stance on the country’s stocks to overweight. 

“We are not in a situation where interest rates are going to rise significantly, so that and the performance of individual companies will determine whether funds will come in again toward the end of the year,” Aizawa’s Mitsui said. 

The finance ministry data also showed foreigners bought ¥439.4 billion of the nation’s bonds, while Japanese investors purchased ¥885.5 billion of foreign debt and ¥62.6 billion of overseas stocks.

(Updates with TSE data in fourth paragraph, comment from equity investor in fifth paragraph.)

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