Investing.com -- Japanese investors have been increasing their holdings in foreign stocks, motivated by a favorable U.S. core inflation report and a strong yen that has enhanced domestic buying power.
This trend has been observed for six consecutive weeks through January 18, with a net investment of 489.8 billion yen ($3.13 billion) in overseas stocks, marking the second-largest weekly net purchase since September 7, 2024, as per data from Japan's Ministry of Finance.
This rise in foreign stock investments is also attributed to increased inflows into the new Nippon Individual Savings Accounts (NISA) program, a tax-free investment scheme. Analysts predict this trend to continue until March.
Last week's U.S. core inflation data for December showed a 3.2% increase, slightly under the anticipated 3.3%.
Japanese market participants also bought foreign debt securities worth a net 1.01 trillion yen, the highest weekly amount since November 9. This included 819.3 billion yen in long-term bonds and 194.2 billion yen in short-term bills.
Contrarily, Japanese stocks experienced a slight outflow of foreign capital, with 66.1 billion yen leaving the market last week. This followed inflows of 259.1 billion yen in the previous week.
Foreign investors also showed interest in Japanese bonds, purchasing a net 876.1 billion yen in long-term bonds, the largest amount in six weeks. They also added a net 1.33 trillion yen worth of short-term bills last week.
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