(Bloomberg) — Foreign investors bought ¥1.18 trillion ($7.7 billion) of Japanese stocks last week, the most since 2013, on bets companies will step up share buybacks and dividends amid a push to create a more shareholder-friendly culture.
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It’s the second-biggest amount of weekly net purchases on record after ¥1.5 trillion in 2013, data from Japan Exchange Group Inc. showed on Thursday. Japanese individual investors also piled in, snapping up ¥634 billion of shares in the first week of the financial year, according to the data. It was the most since September.
“Foreign investors probably feel that Japanese companies can easily generate profits with moderate inflation,” said Ikuo Mitsui, a fund manager at Aizawa Securities Co. Buying from overseas is likely to increase further if companies “give a slightly positive impression on this year’s earnings momentum.”
The Nikkei 255 Stock Average dropped 3.4% last week, the biggest weekly decline since December 2022, as Japanese investors sold a massive amount, likely for profit-taking.
Net selling by trust banks reached a record ¥789 billion. These numbers are closely watched because they are considered to reflect flows from the banks’ customers, such as big pension funds.
Even as investors overseas sold ¥346 billion of stock futures, though, their purchases of both cash equities and futures reached ¥836 billion, the largest amount since January.
“We expect foreign investors to raise their position a little in Japanese equities in the first half as they will likely continue to be underweight,” Mitsui said.
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