Funds Leave Unstable US for Japan... Record-High Net Purchases of Stocks and Bonds

Foreign Net Purchases Exceed 8 Trillion Yen in April... All-Time High
"Japan Emerges as a Safe Haven Asset Amid US Market Uncertainty"

Due to the uncertainty caused by US President Donald Trump's tariff policies, investment funds that exited the US financial markets have flowed in large volumes into Japan's stock and bond markets.

Japanese yen and US dollar. Photo by Yonhap News

On May 12, the Nihon Keizai Shimbun (Nikkei) reported, citing data from the Japanese Ministry of Finance's "Domestic and Foreign Securities Transactions" released that day, that the net purchases of Japanese stocks and bonds (excluding short-term bonds) by foreign investors in April reached 8.213 trillion yen (approximately 79 trillion won). This is the largest amount since related statistics began in 2005, significantly surpassing the previous record of the 6 trillion yen range in April 2023.

By security type, medium- and long-term government bonds accounted for 4.5371 trillion yen (about 43.6 trillion won), while stocks and investment funds recorded net purchases of 3.6759 trillion yen (about 35.32 trillion won). The net purchases of bonds were the second largest ever, and for stocks, the third largest on record.

Nikkei identified distrust in President Trump as the reason for the influx of foreign investment into Japanese assets. The spread of anxiety over the US market, triggered by President Trump's tariff policies and threats to dismiss the Federal Reserve (Fed) Chair, has led to a sell-off of US assets and a massive inflow of investment funds into Japan, according to the analysis.

Inatome Katsutoshi, chief strategist at Mitsui Sumitomo Trust Asset Management, told the Nihon Keizai Shimbun, "As President Trump continues to vacillate, the US market has become unstable, which has increased attention on Japan as a safe haven asset."

It was also analyzed that the rising yields on Japanese government bonds have increased their price attractiveness, stimulating purchases, and that the preference for Japanese government bonds as a destination for foreign currency reserves by central banks around the world has grown. Naoya Hasegawa, chief bond strategist at Okazaki Securities, said, "Given the unusually large scale of net purchases, it can be inferred that funds related to foreign exchange reserves have flowed in."