Japanese Investors Buy $14 Billion in Foreign Stocks
Japanese investors bought $14 billion in foreign stocks last month. This was the largest purchase since April 2025, driven by new tax-free NISA fund flows.
Investors in Japan significantly increased their holdings in overseas equities during March, marking the highest level of investment in nearly a year. Data released by the Ministry of Finance indicates that local investors net acquired foreign stocks worth 2.22 trillion yen, approximately $14.04 billion. This surge represents the largest monthly net purchase since the United States Liberation Day tariff announcements in April 2025, which triggered a 3.27 trillion yen inflow. Market analysts suggest that the recent weakness of the USD/JPY exchange rate, combined with relatively lower equity prices influenced by geopolitical tensions in the Middle East, bolstered investor appetite. A significant portion of this activity was driven by the New NISA (Nippon Individual Savings Account) program. Analysts at Barclays noted that this government initiative, designed to transition trillions of yen from household cash reserves into the stock market through tax-free investment accounts, was a primary driver of the equity flows. While equity purchases climbed, Japanese investors simultaneously offloaded 4.12 trillion yen in foreign bonds, the largest monthly net sale since October 2024. Trust accounts were particularly active in this rotation, purchasing roughly 1.3 trillion yen in foreign stocks while divesting a net 601.4 billion yen in long-term bonds. Additionally, investment trust management companies and banking accounts contributed 828.3 billion yen and 226.3 billion yen, respectively, to the foreign equity market. Supplementary data from the Bank of Japan revealed a sharp retreat from American debt in February, with investors selling a net 3.42 trillion yen in U.S. bonds—the highest monthly divestment since June 2022. During the same period, Japanese investors reduced their exposure to European debt, selling 173.3 billion yen in regional bonds. This included the sale of bonds from France worth 270.14 billion yen and Germany worth 131.73 billion yen. In contrast, they remained net buyers of debt from Italy, adding 158.07 billion yen to their portfolios.
