Foreign investors bought a net 1.2 trillion yen ($8.1 billion) of Japanese stocks last week, their biggest purchase since October, data from the Ministry of Finance showed on Thursday.
International demand has helped Japanese shares extend their outperformance versus other major equity markets into the new year. The blue-chip Nikkei 225 Stock Average rose 6.6% last week, the biggest weekly gain since March 2022, adding to an annual advance of more than 25%.
Both the Topix index and Nikkei 225 are at their highest levels in 34 years, thanks to bullish factors such as a weaker yen, negative interest rates and the Tokyo Stock Exchange’s push to improve corporate governance.
The Nikkei 225 may be headed for 40,000 as shares test record highs through the middle of the year, Hikaru Yasuda, the chief equity strategist at SMBC Nikko Securities, wrote in a note. While the gauge’s recent advance resembles the April-June 2023 rally, momentum is stronger and suggests overseas pension funds and sovereign funds are playing a “long game,” Yasuda wrote.
The MOF’s weekly data comes ahead of more comprehensive trading figures from Tokyo’s exchange after the market closes on Thursday. While the two data sets generally paint a similar picture, sometimes there are significant gaps due to differences in coverage.
