Foreign Investors Fuel Japanese Stock Surge Amid AI Optimism

Foreign investors turned net buyers of Japanese stocks in the week ending June 28, following easing tensions in the Middle East and a surge in technology stocks. A report from Japan's finance ministry confirmed a net purchase of 651.3 billion yen in Japanese stocks, marking the highest figure in six weeks and continuing a trend of 12 weeks of purchasing out of the last 13.

The Nikkei index climbed 4.55% last week, driven by global optimism in artificial intelligence. This rally boosted chip-related companies such as Tokyo Electron and Advantest by 14.72% and 7.67%, respectively. SoftBank Group, an AI investment giant, saw a heightened interest with a 12.26% rise. Overall foreign inflows reached 7.46 trillion yen for the quarter ending June 30, achieving the highest quarterly figures since June 2023.

In bond markets, long-term Japanese bonds recorded net foreign inflows of 1.05 billion yen, despite a net sell-off of 633.9 billion yen in short-term bills by foreigners. Meanwhile, Japanese investors resumed buying foreign stocks, purchasing 190.6 billion yen worth and ending their six-week sale streak. They added a net 182.8 billion yen in long-term foreign bills for the third consecutive week.