Key facts
- Japanese investors sold a net 2.72 trillion yen ($16.98 billion) of foreign stocks in May.
- This represents the largest net withdrawal of foreign stocks by Japanese investors since April 2021.
- The divestment was driven by caution over Middle East hostilities and concerns about an overheated tech rally.
- Japanese investors simultaneously bought a net 2.9 trillion yen of foreign debt securities, the most since May 2025.
- Trust accounts were major sellers of foreign stocks, while investment trust management companies and life insurers were net buyers.
Japanese investors significantly reduced their holdings of foreign stocks in May, selling a net 2.72 trillion yen ($16.98 billion), the largest divestment in approximately five years. This cautious stance was attributed to concerns over Middle East hostilities and the sustainability of a tech-driven market rally. Concurrently, these investors increased their allocation to foreign debt securities, purchasing a net 2.9 trillion yen, the highest amount since May 2025.
Data from Japan's Ministry of Finance revealed that trust accounts were the primary sellers of foreign equities, divesting 3.38 trillion yen, while channeling 3.16 trillion yen into bonds. In contrast, investment trust management companies and life insurers showed a net buying trend in foreign stocks. Earlier data from the Bank of Japan indicated that Japanese investors had purchased substantial amounts of U.S. and European stocks in the first four months of the year, along with British and Spanish equities.