May 22, 2023

Japan stocks rise to their greatest level since 1990 as “foreign investors are back”

The Topix Index in Japan reached its highest level since August 1990, indicating a resurgence of foreign investment.

More than 6% have been added to the Topix, commonly known as the Tokyo Price Index, so far this year. The roughly 2,000-member broad-based index has beaten its Asia-Pacific counterparts in the area.

Leading the way up on Wednesday were utilities, consumer cyclicals, technology, and financials, which together contributed to the Topix’s 0.6% gain on Tuesday. On Wednesday morning, the biggest gainers included Tokyo Electron, Oriental Land, Softbank Group, Sony, and Nintendo.

Foreign investors are returning, which testifies to the nature of Japan’s equities market recovery, according to a report published on Tuesday by Societe Generale’s Asia equity strategists Frank Benzimra and Tsutomu Saito.

“That is less [of] a duration trade than a broad-based upturn based on fundamentals, robust domestic demand, and more generous distribution policy (share buybacks accelerate),” he said.

The company said that overseas investors purchased Japanese equities for a net of 2.1 trillion yen ($15.4 billion) in April. It also stated that the corporate sector of Japan continues to be the greatest net purchaser of Japanese stocks, with a volume of 1.1 trillion yen year-to-date.

NSK, Mitsubishi Materials, and Nippon Sheet Glass were among the leading industrial companies that helped the Nikkei 225 index reach its highest level since November 2021. On Wednesday morning, the index exceeded the psychological threshold of 30,000.

Shares of Japan’s top five trading houses rose in value earlier this year after Berkshire Hathaway Chairman and CEO Warren Buffett increased his investment in the companies and signaled that he would do so further.

Buffett’s recent visit to Japan to meet with trading businesses was seen as a “stamp of approval” for investing in Japan, according to Jesper Koll of Monex Group.

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