On October 10, 2024, it was reported that foreign investors significantly increased their purchases of Japanese stocks during the week ending October 5, as the yen weakened following dovish remarks from Prime Minister Shigeru Ishiba. This trend is seen as boosting the appetite for local exporters.
According to Finance Ministry data, foreigners acquired Japanese stocks worth 919.3 billion yen (approximately $6.16 billion) on a net basis, marking the largest weekly net purchase since April 13. The yen depreciated by around 4.4% against the dollar last week, the most substantial decline since December 2009, as concerns eased regarding potential rate hikes after Ishiba indicated that Japan is not in a position for an additional rate increase.
Despite this surge, foreigners have divested approximately 5.42 trillion yen worth of Japanese stocks in the second half of this year, following about 6 trillion yen of net purchases in the first half. Exchange data revealed that while foreigners invested around 395.55 billion yen into Japanese cash equities, they remained net sellers of derivative contracts for the third consecutive week, with net sales totaling about 604.4 billion yen.
In the Japanese bond market, foreign investors purchased a net 1.38 trillion yen worth of long-term securities, the largest weekly net purchase since September 14, and also invested about 50.3 billion yen into short-term instruments. Conversely, Japanese investors bought 696.7 billion yen worth of foreign bonds after a previous week of net selling.
This influx of foreign capital into Japan's stock market amid a weakening yen highlights the ongoing dynamics of international investment and currency valuation, with potential implications for Japan's economic outlook.