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(Bloomberg) — Foreign investors bought the most Japanese stocks and futures in more than a decade in the days following Prime Minister Sanae Takaichi’s historic election win.
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Foreigners bought a combined net ¥1.78 trillion ($11.5 billion) in Japanese shares and index futures in the week ended Feb. 13, the largest amount since November 2014, according to data released Thursday by Japan Exchange Group. That came after Takaichi’s victory fueled expectations of political stability and more government spending.
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The influx reflects the growing appeal of Tokyo’s equity market as global investors diversify away from the US in search of more reliable gains. Japan’s broader Topix Index has risen 13% so far this year, trouncing the S&P 500, which has only eked out a small gain.
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“If you’re looking outside of the US right now, Japan is right up there,” said Russell Shor, a Johannesburg-based senior market strategist at trading platform Tradu.
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“The political stability after the election is massive, and it’s not just stability — it’s the margin by which Takaichi won. That makes Japan hugely attractive,” Shor said.
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Optimism that Takaichi’s fiscal expansionary plans will boost industries from AI to energy to shipbuilding has been a major driver, along with tailwinds for exporters from the weak yen, and continued pressure from activist investors.
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Meanwhile, with AI-related jitters and geopolitical worries dimming the shine of US equities in recent months, “the equity risk premium in Japan is particularly appealing” for international fund managers, Shor said.
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