Record Foreign Investment Fuels Japanese Stocks Rally

Japanese stocks surged as foreign investors poured in the largest weekly investment in over four months. The market rally was driven by U.S. rate cut prospects and strong domestic economic growth. The Nikkei 225 hit an all-time high, fueled by substantial foreign and domestic shifts in stock and bond investments.

In a major financial surge, Japanese stocks attracted the largest weekly foreign investment in more than four months during the week of August 16. This influx of funds set the stage for a record-setting market rally, fueled by prospects of a U.S. interest rate cut and robust domestic economic growth figures.

Data from Japan's Ministry of Finance revealed that foreign investors bought a net 1.16 trillion yen ($7.87 billion) of Japanese stocks, marking the most significant weekly purchase since April 5. The Nikkei 225 Index, which has climbed nearly 39% since hitting a low of 30,792.74 on April 7, rose by another 3.73% last week, achieving a peak of 43,876.42 before a slight pullback.

Additionally, Japanese investors showed a mixed response in the bond market, with net purchases of foreign long-term bonds falling to 313.6 billion yen. On the flip side, they added a net 395 billion yen in foreign stocks, breaking a two-week selling streak.

(With inputs from agencies.)