Foreign Investors' Net Purchases of Japanese Stocks Hit Record High in First Half
Miles Bennett
Overseas investors net-bought ¥9.7 trillion of Japanese equities in H1 2026, smashing the half-year record — nearly double the full-year 2025 total; AI stocks are the magnet, but whether reform delivers will decide if the money stays.
How big is ¥9.7 trillion?
In the first half of 2026, foreign investors net-bought ¥9.7 trillion (≈$60 billion) of Japanese stocks — an all-time half-year record.
That is nearly twice the full-year 2025 net purchase of ¥5.4 trillion, and roughly four times the year-earlier half.
The previous record was ¥8.3 trillion during the Abenomics rally in H1 2013. This means → foreign appetite for Japan now exceeds the peak of the Abe era.
Why is the Nikkei crushing every other major market?
Fueled by foreign inflows, the Nikkei 225 broke 60,000 in April and 70,000 in June — two landmark thresholds in under two months, the shortest span on record.
By end-June the index was up 39% from end-2025, dwarfing the Euro Stoxx 600's 8% and the S&P 500's 10%.
In plain terms = among major global markets in H1, Japan was in a league of its own — gaining roughly four times as much as U.S. equities.
Why Japan? The core answer is AI
UBS Securities' head of equity sales, Ryosuke Nakatomi, says new fund managers appear almost every week, hunting for AI and data-center plays.
Fiber-optic maker Furukawa Electric saw its foreign ownership ratio jump 19.6 percentage points — the largest increase among Nikkei 225 constituents — driven by surging data-center demand. Mitsui Mining and Kioxia Holdings also recorded sharp rises in foreign ownership.
Ajinomoto, which leveraged seasoning technology to build a leading chip-insulation-material business, has entered the foreign-investor radar too. This reflects a broadening of Japan's AI appeal from marquee semiconductor-equipment names into niche materials suppliers.
What role has PM Takaichi played?
The acceleration in foreign buying lines up with PM Sanae Takaichi taking office last October.
Alexander Hart of Sumitomo Mitsui DS Asset Management visited European investors last month and was repeatedly asked about the Takaichi government's approval ratings and economic policies — markets have high expectations for her growth strategy.
Mizuho International's head of Japan equities, Daisuke Suzuki, notes that investors who previously had limited Japan allocations have been steadily adding positions this year. This means → it is not just existing holders adding — new money is entering.
Above 70,000 — who is buying and who is selling?
The Nikkei 225 has turned choppy after hitting 70,000, but Suzuki sees limited downside: "Hedge-fund profit-taking is clear, but whenever prices dip, long-term investors step in quickly to buy."
In plain terms = short-term money is cashing out near the top while long-term capital scoops up every pullback — creating a floor that limits declines.
What is the biggest risk?
Rick Friedman, portfolio strategist at U.S. asset manager GMO, warns that if Japanese exchanges and corporate boards truly abandon governance reform, "the foreign capital that has re-entered will leave or lose enthusiasm."
The Abenomics era provides a precedent — foreign money that flooded in eventually turned to net selling as follow-through on reform slowed.
This means → whether foreign capital stays ultimately depends on whether Japanese corporate reform delivers on its promises. Getting the money in was the easy part; keeping it is the real test.
Content is for reference only, not financial advice.