Foreign investors extend Japan stock buying streak on AI rally

Foreign investors increased their holdings of Japanese shares for an eighth straight week through May 23, as AI-related stocks rallied and oil prices eased, official data released Thursday showed. The Ministry of Finance reported a net 1.08 trillion yen ($6.77 billion) of foreign buying of Japanese equities in the week ended May 23. That was nearly 14% higher than the 948.4 billion yen in net purchases the previous week.

The inflows came as technology shares led gains, after Nvidia forecast strong demand for its flagship AI chips. The move helped lift several Japan-listed companies seen as beneficiaries of AI spending.

Shares of SoftBank Group, which invests in AI-related businesses, rose 17.62% last week, while chip designer Socionext gained 12.26%.

Tech-led inflows lift year-to-date foreign buying

Foreign investors have injected nearly 11.7 trillion yen into Japanese stocks so far this year, compared with about 742.1 billion yen over the same period last year, the data showed.

The foreign buying has been concentrated in sectors tied to semiconductors and AI, reflecting global investor interest in companies linked to chip demand and related supply chains. The latest weekly figures also pointed to a renewed bid for longer-dated Japanese debt after recent volatility in the bond market.

Bond flows turn positive as long-term demand returns

Foreign investors made a net purchase of 1.35 trillion yen in Japanese long-term bonds, reversing the previous week’s outflow of 1.03 trillion yen, as bond sell-offs subsided and higher yields attracted capital.

They still sold 2.22 trillion yen of short-term instruments, the largest outflow since March 28, according to the same data.

Japanese investors, meanwhile, withdrew 358.7 billion yen from foreign equities for a third net weekly sale in four weeks. They bought 10.3 billion yen in long-term foreign bonds, extending a four-week buying streak.

Investors will watch whether foreign equity inflows and bond demand hold up as global technology shares and energy prices continue to shape risk appetite.