Foreign Investment Surge Boosts Japanese Stocks to Record Highs

Foreign investors significantly increased their investments in Japanese stocks, elevating stock levels to record highs following the election of Prime Minister Sanae Takaichi. Despite notable gains, foreign investors sold off long-term bonds while Japanese investors reversed buying trends in foreign stocks and bonds.

Foreign investors significantly increased their investments in Japanese stocks during the week leading up to February 14, reaching historic levels. This surge followed Prime Minister Sanae Takaichi's election victory, which cleared the path for her stimulus and pro-growth reforms. The net investment reached 1.42 trillion yen ($9.15 billion), marking the largest influx since October 11.

Amidst this influx, the Nikkei achieved a record high of 58,015.08, rising approximately 4.96% for the week. Prime Minister Takaichi was reelected after the Liberal Democratic Party's resounding victory in the lower house election on February 8. Nonetheless, foreign investors continued to sell long-term bonds, totaling a net 393 billion yen in outflows, while maintaining their purchase of 234.8 billion yen worth of short-term bills.

Conversely, Japanese investors showed a retreat from foreign investments, selling a modest 25.8 billion yen in foreign stocks. They also withdrew 489.5 billion yen from foreign long-term bonds and an additional 506 billion yen from short-term bills, marking their first weekly net sales in four weeks.

(With inputs from agencies.)