Foreign Investors Eye Japanese Markets Amid Election Uncertainty

Foreign investors continued their buying spree of Japanese stocks for the fourth consecutive week, supported by a weaker yen and a rally in artificial intelligence-connected technology stocks. Concerns loomed large before an upper house election, yet cross-border investors snapped up a net 571.9 billion yen ($3.88 billion) in Japanese stocks in the week ending July 19, according to Japan's Ministry of Finance data released on Friday. This marked their 15th weekly net purchase in 16 weeks.

Taiwanese chipmaker TSMC's impressive second-quarter earnings further fueled investor interest in technology stocks, leading to a 6% surge in SoftBank Group shares. Additionally, a drop in the yen to a 2-1/2-month low of 149.18 per dollar buttressed demand for Japanese exports.

Foreigners have acquired around 1.63 trillion yen worth of local stocks this month, following a robust 7.19 trillion yen net acquisition in the June quarter. Uplifted by strong foreign demand and a U.S.-Japan trade deal this week, the Topix index reached a record high on Thursday. On the bond front, Japanese long-term bonds saw a net outflow of 990.7 billion yen after an inflow the previous week, while short-term bills experienced a net addition of nearly 1.89 trillion yen. Concurrently, Japanese investors invested in 296.5 billion yen of foreign equities and injected 1.64 billion yen into long-term foreign debt, marking a sixth week of purchases. The ruling coalition lost its upper house majority in Sunday's election, weakening Prime Minister Shigeru Ishiba's hold on power.

(With inputs from agencies.)