Foreign investors pour $18.65 billion into Japanese stocks on return after three weeks

Foreign investors injected a net ¥2.85 trillion ($18.65 billion) into Japanese equities during the week ending May 3, 2024, marking a significant return to the market after a three-week hiatus of net selling. This substantial inflow, reported by Japan Exchange Group based on exchange data, represents the largest weekly net purchase by overseas investors in over two months and signals renewed confidence in Japan's corporate and economic outlook. The massive buying spree comes amid a backdrop of a weakening yen, which has hovered near 34-year lows against the U.S. dollar. A cheaper yen boosts the value of overseas earnings for Japan's major exporters when repatriated, making their stocks more attractive to foreign investors seeking currency gains alongside equity returns. Market analysts point to this dynamic, combined with strong corporate earnings reports from leading Japanese firms, as the primary catalysts driving the renewed foreign interest. The investment was particularly concentrated in cash equities, with the Nikkei 225 Stock Average showing resilience during the period. This reversal in capital flows is a positive development for the Tokyo Stock Exchange, which has been actively campaigning for companies to improve governance and focus on shareholder returns through measures like share buybacks and higher dividends. The record-level investment suggests that these corporate reforms, alongside supportive monetary policy from the Bank of Japan, are resonating with the global investment community. The move underscores Japan's regained status as a key destination for international capital, contrasting with recent outflows from some other Asian markets.