In early 2025, foreign investors surged into Japanese stocks, acquiring $12.3 billion in equity holdings over a two-week period as global markets reacted to speculation of Donald Trump’s potential return to the U.S. presidency. The inflow marked the largest two-week net purchase since 2018 and signaled a flight-to-safety strategy among international capital.
- Foreign investors bought $12.3 billion in Japanese stocks in January 2025.
- This was the highest two-week net purchase since 2018.
- Toyota’s foreign ownership rose to 29.8%, Sony’s to 35.6%.
- The yen gained 4.7% against the dollar during the period.
- TOPIX index rose 6.2% on the foreign inflow.
- Investors cited governance reforms and valuation appeal as key drivers.
A sharp uptick in foreign demand for Japanese equities emerged in January 2025, driven by geopolitical uncertainty surrounding the possibility of Donald Trump’s re-election in the United States. Over a 14-day window beginning January 2, foreign institutional investors accumulated a net $12.3 billion in Japanese stocks, according to exchange data. This volume represented a 310% increase compared to the same period in 2024 and was the highest two-week inflow since the 2018 trade tensions peak. The rally was concentrated in large-cap Japanese firms with strong global supply chains and resilient earnings. Key beneficiaries included Toyota Motor Corporation (TYO: 7203), which saw foreign ownership rise by 2.3 percentage points to 29.8%, and Sony Group Corporation (TYO: 6758), where foreign stake increased by 1.9 points to 35.6%. Japanese exporters such as Nikon Corp. (TYO: 7731) and Mitsubishi Heavy Industries (TYO: 7011) also attracted significant interest. The Japanese yen strengthened by 4.7% against the U.S. dollar during the same period, reflecting growing confidence in Japan’s financial stability and the perceived safe-haven appeal of its assets. The Tokyo Stock Price Index (TOPIX) rose 6.2% over the two weeks, outperforming regional peers including the S&P 500 and the Hang Seng Index. Market participants noted that the influx was not solely driven by risk-off sentiment. Many foreign fund managers cited Japan’s corporate governance reforms, strategic dividend payouts, and attractive valuations relative to other developed markets as complementary factors. The flow highlighted a broader shift in global capital allocation, with foreign investors repositioning portfolios ahead of anticipated U.S. policy volatility.