Japanese Investors Flee Foreign Stocks Amid Market Volatility

Japanese investors sold foreign stocks at the fastest rate in five years in May due to concerns over Middle East tensions and an overheated tech market. While stocks were divested, they purchased significant amounts of foreign debt securities, including U.S. and European bonds.

In May, Japanese investors sold foreign stocks at an unprecedented rate, marking the fastest withdrawal in five years. This move was driven by apprehensions over Middle East hostilities and fears that the tech market rally had overextended. The Ministry of Finance (MOF) reported a net sale of 2.72 trillion yen ($16.98 billion) in foreign stocks during this period.

Despite the stock selloff, Japanese investors demonstrated significant interest in foreign debt securities, purchasing a net 2.9 trillion yen worth—the highest since May 2025. Investment trust accounts divested foreign stocks but reinvested heavily into bonds, as confirmed by MOF.

Further insights reveal investment trusts and life insurers bought foreign stocks amounting to 614.6 billion yen and 77.5 billion yen, respectively. The Bank of Japan data highlighted substantial acquisitions of U.S. and European stocks by Japanese investors in the year's first four months.