Foreign investors poured a net 1.08 trillion yen ($6.77 billion) into Japanese stocks in the week ending May 23, marking a nearly 14% increase from the previous week's 948.4 billion yen. This surge is largely attributed to heightened interest in the tech sector, driven by Nvidia's forecast of strong demand for its AI chips.
The tech sector's allure was evident as SoftBank Group, a prominent AI investor, saw its shares rise by 17.62% last week, while chip designer Socionext experienced a 12.26% rally. Foreign investments in Japanese stocks have reached nearly 11.7 trillion yen this year, a significant leap from the 742.1 billion yen recorded in the same period last year.
In the bond market, Japanese long-term bonds witnessed a net purchase of 1.35 trillion yen, reversing the previous week's outflow of 1.03 trillion yen. This shift was prompted by easing bond selloffs and attractive yields. Conversely, foreign investors divested 2.22 trillion yen from short-term instruments, marking the highest level of divestment since March 28.
Japanese investors, on the other hand, withdrew a net 358.7 billion yen from foreign equities, continuing a trend of net sales for the third time in four weeks. However, they invested a modest 10.3 billion yen in long-term foreign bonds, marking a fourth consecutive week of buying.
The Ministry of Finance's data highlights the ongoing global interest in Japan's tech sector, particularly in AI, which has been a significant driver of foreign investment. The increased inflow into Japanese stocks reflects broader market trends and investor confidence in Japan's economic prospects.
Background
The increased foreign investment in Japanese stocks underscores the global market's focus on technological advancements, particularly in AI, which has been a major growth area. Japan's tech sector, with companies like SoftBank and Socionext, continues to attract substantial foreign capital, reflecting investor confidence in the country's innovation and economic stability.
Looking ahead, market participants will closely monitor the tech sector's performance and any further developments in AI technology, as these factors are likely to continue influencing foreign investment patterns in Japan.
