Japanese Investors Ride AI Wave: Profits Locked Amid Market Turbulence

Japanese investors significantly sold foreign stocks in October to secure profits from an AI-driven rally, amid worries about overstretched valuations and a U.S. government shutdown. Approximately 1.84 trillion yen was withdrawn, marking the highest net sales since June, with substantial impacts from trust accounts.

Japanese investors have offloaded substantial amounts of foreign stocks last month in a bid to capitalize on an artificial intelligence-driven market surge. This comes amid increasing concern over high valuations and an impending U.S. government shutdown, according to Japan's Ministry of Finance data.

Local investors withdrew approximately 1.84 trillion yen ($12.20 billion) from foreign stock markets in October, the highest level of net sales since June. Trust accounts dominated these outflows, with roughly 1.93 trillion yen in net sales recorded. Compared to the previous records of net sales this year, these figures are notably substantial.

Despite this sell-off, investment trust management companies and life insurers made modest investments, with 503.5 billion yen and 83.3 billion yen injected into overseas stock markets, respectively. In the bond market, Japanese investors registered net sales of 1.24 trillion yen in foreign long-term bonds, halting a five-month streak of net purchases.

(With inputs from agencies.)