Foreign Ownership of Japanese Stocks Hits Record High, AI-Related Shares Lead Gains
Nashnova编辑部
Foreign investors' share of Japanese equities rose to 34.7% in FY2025, a third consecutive record; AI supply-chain plays and activist-driven governance reform are the two main threads as money shifts from 'buy size' to 'buy profitability.'
Why have foreigners added to Japan three years running?
Tokyo Stock Exchange data show overseas investors now hold 34.7% of Japanese equities, a record for the third straight year.
Okasan Securities strategist Daisuke Uchiyama notes the shift: foreign funds increasingly pick stocks on return on equity and profitability rather than market cap and liquidity.
This means → overseas money is no longer just chasing "big and liquid." It is screening for earnings efficiency — a structural signal for Japan's market.
Which AI supply-chain names attracted the most foreign capital?
Furukawa Electric saw foreign ownership rise 19.6 percentage points. Its fiber-optic cables — high-speed links connecting servers inside AI data centers — are selling strongly. Net profit for the year ending March 2027 is forecast to grow 45%, and the stock was added to the MSCI ACWI this year.
Mitsui Kinzoku gained 15 percentage points in foreign ownership, driven by surging demand for its copper foil — thin sheets of copper that carry electrical signals inside circuit boards — used in AI servers.
Memory-chip maker Kioxia Holdings has foreign ownership of 68.5% and briefly became Japan's largest listed company by market cap in June.
In plain terms = foreign buying in AI is not a vague "buy Japan tech" trade. Capital is flowing precisely into fiber, copper foil, and memory chips — upstream suppliers of AI infrastructure.
How are activist funds reshaping Japanese companies?
Audio-equipment maker Foster Electric posted the biggest foreign-ownership jump: up 24.9 percentage points to 44.4%. Singapore-based activist Axium Capital is the top shareholder; its CIO Yasuto Monden was appointed outside director at this year's AGM.
Driven by restructuring and higher return expectations, Foster's stock more than doubled in a year. Its annual dividend plan rose to ¥115 per share, up ¥35 from the prior year.
Digital-device maker Wacom saw foreign ownership rise 13.4 percentage points to 55.8%, with UK activist Asset Value Investors (AVI) adding to its stake.
This reflects a broader opening: revisions to Japan's corporate-governance code are giving activists more room to engage — foreign buying is a bet on both earnings and governance improvement.
Which sectors saw the broadest foreign inflows?
Among the TSE's 33 industry groups, electrical equipment had the most companies with rising foreign ownership: 68.
Banks followed with 64 companies gaining foreign holders — the market expects wider interest-rate spreads after BOJ hikes to boost bank earnings. But the single-largest gain was only 9.0 percentage points (Ogaki Kyoritsu Bank), far below AI and activist names.
This means → banks are a "breadth" story (many small gains), while AI and activist plays are a "depth" story (a few very large gains).
Can this foreign buying wave last?
In FY2025 overseas investors were net buyers of Japanese stocks to the tune of ¥10.34 trillion, near a 22-year high.
Through July, FY2026 net buying has already topped ¥7 trillion, with no sign of slowing.
In plain terms = whether foreign funds keep selecting on profitability rather than size is the key test of Japan's structural appeal — if that logic holds, inflows are not cyclical but a long-term trend.
Content is for reference only, not financial advice.