Foreign investors buy Japanese stocks for eighth week on AI rally

• Weekly foreign purchases of 1.08 trillion yen ($6.77 billion) marked a nearly 14% increase from the prior week's 948.4 billion yen
• AI-related stocks led gains, with SoftBank Group surging 17.62% and chip designer Socionext rallying 12.26% following Nvidia's strong revenue forecast
• Foreign investors also bought 1.35 trillion yen of Japanese long-term bonds after the prior week's outflows, attracted by higher yields as the bond selloff eased

Summary: Foreign Investors Buy Japanese Stocks for Eighth Week on AI Rally

Foreign investors extended their buying streak in Japanese equities for the eighth consecutive week through May 23, driven primarily by an artificial intelligence rally. Net foreign purchases reached 1.08 trillion yen ($6.77 billion), up nearly 14% from the previous week's 948.4 billion yen, according to Ministry of Finance data released Thursday.

Key Investment Flows:

• Year-to-date foreign investment in Japanese stocks has surged to nearly 11.7 trillion yen, dramatically higher than the 742.1 billion yen invested during the same period last year
• The tech sector led gains following Nvidia's strong revenue forecast and stock buyback announcement

Notable Stock Performance:

• SoftBank Group jumped 17.62% for the week
• Chip designer Socionext rallied 12.26%

Bond Market Activity:

Japanese long-term bonds attracted net purchases of 1.35 trillion yen after the previous week's 1.03 trillion yen in outflows, as easing bond selloffs and higher yields drew investors. However, foreigners divested 2.22 trillion yen in short-term instruments, marking the largest withdrawal since March 28.

Japanese Investor Behavior:

Japanese investors pulled 358.7 billion yen from foreign equities, their third net sale in four weeks. Conversely, they invested a modest 10.3 billion yen in long-term foreign bonds, extending purchases to a fourth consecutive week.

Market Implications:

The sustained foreign inflows underscore growing international confidence in Japanese equities, particularly within the technology sector, as global AI enthusiasm continues to drive investment decisions. The exchange rate stood at 159.53 yen per dollar.