Goldman Sees US Investors Flocking To Japan As Nikkei Surges

Economic

Summary:

US investors are increasingly buying Japanese stocks focused on tech and artificial intelligence, lured by the country's outsized returns compared with US stocks, according to Goldman Sachs Group Inc.

"The increase in US flows is now moving at the fastest pace we've seen since Abenomics," said Bruce Kirk, the bank's chief Japan equity strategist. US investor active participation in Japanese equities is at the highest level since October 2022, Kirk said, adding that he gets frequent requests for meetings.

The inflow of US funds reflects the strong performance of Japanese equities in dollar terms this year. They have been helped by a 2.5% gain in the yen and renewed optimism driven by the pro-stimulus policies of prime minister Sanae Takaichi. The benchmark Nikkei 225 index has climbed about 30% in dollar terms this year, far outpacing the S&P 500 index's 14% gain.

Rising participation from US funds could mark a turning point for Japan's equity market, signaling a potential shift in drivers to growth-oriented shares from value stocks. Driven by pro-investor initiatives from the Tokyo Stock Exchange and the government, value stocks have outperformed growth stocks for four consecutive years since 2021.

"It's very significant that you've got more US participation coming and they tend to gravitate toward tech and AI-related themes," Kirk said in an interview on Nov. 6.

Kirk sees further upside in foreign fund inflows as global investors' net positions in Japanese equities remain light compared to the peak of Abenomics, leaving room for further buying. Global investors' continued diversification needs will likely sustain that trend, he said.

Foreign investors bought a net 384 billion yen ($2.5 billion) of Japanese equities in cash and futures in the last two weeks of October, according to data released by Japan Exchange Group.

Even so, given that the Nikkei entered overbought territory in late October, Kirk said he would not be surprised to see the market consolidate.

Source: Bloomberg

To stay updated on all economic events of today, please check out our Economic calendar

Risk Warnings and Disclaimers

You understand and acknowledge that there is a high degree of risk involved in trading. Following any strategies or investment methods may lead to potential losses. The content on the site is provided by our contributors and analysts for information purposes only. You are solely responsible for determining whether any trading assets, securities, strategy, or any other product is suitable for investing based on your own investment objectives and financial situation.

Risk Disclosure

The risk of loss in trading financial instruments such as stocks, FX, commodities, futures, bonds, ETFs and crypto can be substantial. You may sustain a total loss of the funds that you deposit with your broker. Therefore, you should carefully consider whether such trading is suitable for you in light of your circumstances and financial resources.

No decision to invest should be made without thoroughly conducting due diligence by yourself or consulting with your financial advisors. Our web content might not suit you since we don't know your financial conditions and investment needs. Our financial information might have latency or contain inaccuracy, so you should be fully responsible for any of your trading and investment decisions. The company will not be responsible for your capital loss.

Without getting permission from the website, you are not allowed to copy the website's graphics, texts, or trademarks. Intellectual property rights in the content or data incorporated into this website belong to its providers and exchange merchants.

Recent Searches

Top Searches

Markets

Analysis

User

24/7

Economic Calendar

Education

Data

Goldman Sees US Investors Flocking To Japan As Nikkei Surges

Source: Bloomberg

Risk Disclosure