TOKYOSINGAPORE, June 1 Reuters As foreigners pile into Japan39;s steepest stock market rally in years, local investors have been furiously cashing out or even betting against what many see as the beginning of a longoverdue era of profitability and returns.

The Nikkei share average39;s closed out its best month in 212 years on Wednesday, riding a wave of foreign cash and optimism for corporate reform that has taken it to heights not seen since the country39;s asset bubble burst three decades ago.

Yet Japanese investors have been heavy sellers. In April and May, domestic outflows totalled around 2 trillion yen 14.81 billion for individual investors and over 2.2 trillion yen for Japanese institutions.

While foreign investors are excited about the prospect of a new era of growth in corporate Japan, domestic investors are eager to catch any profits they can, sticking to a strategy born out of decades of fleeting rallies.

That means future gains may rely on foreigners, who are bullish but notoriously slow to act in size and wary of a market that39;s been disappointing for a generation.

It has been a trend that retail investors sell stocks at a peak. This time shortterm investors sold stocks as they were cautious about the sharp gains of the Nikkei, said Shoichi Arisawa, general manager of the investment research department at IwaiCosmo Securities.

Longterm investors also sold stocks because they were saddled with losses after the Nikkei made a rangebound move for a long…