Foreign Investors Fuel Japan's AI Stock Surge Amid Market Cautions

Foreign investors have shown renewed interest in Japanese stocks, with their purchases reaching 611.7 billion yen over the week ending July 5, fueled by a surge in AI-related technology stocks. This marks the 13th week of net buying in 14 weeks, despite broader market caution as the U.S. trade deadline looms.

The Nikkei index encountered a setback, closing with a weekly loss of 0.85% despite climbing to an 11-1/2-month high of 40,852.54. Technology stocks, however, showed resilience as global demand for artificial intelligence-driven innovations rose. Notably, SoftBank Group's shares increased by 6.15%, and chip-testing equipment manufacturer Advantest reached new weekly highs.

Amid these developments, U.S. President Donald Trump's announcement of a 25% duty on Japanese goods starting August 1 contributes to the caution surrounding the market. While foreign investors reduced their holdings in long-term Japanese bonds, they significantly increased their assets in short-term bills. In the international arena, Japanese investors showed a preference for long-term foreign bonds, marking their biggest weekly net purchase in seven weeks.

(With inputs from agencies.)