During a period of significant declines in Japanese technology stocks and major market indices, retail investors in Japan made substantial, record-breaking purchases of domestic equities against the prevailing market trend.
Data from the Japan Exchange Group reveals that for the week ending June 26th, individual Japanese investors were net buyers of domestic spot stocks to the tune of 950 billion yen (approximately $5.9 billion).
In contrast, foreign capital was a net seller, offloading 1.24 trillion yen, marking the largest net selling figure since March of this year.
Shota Sando, an analyst at Tokai Tokyo Intelligence Laboratory Co., noted, "This reflects the trading characteristic of retail investors who buy on dips and act against the trend. Last week's market correction, particularly the significant weakness in technology stocks, attracted a large volume of bottom-fishing capital."
He added that a considerable portion of this was margin buying, representing short-term capital.
"This type of capital is unlikely to drive the Japanese stock market into a sustained upward trend, which is one of the key reasons for the lack of upward momentum in the indices this week."
It is understood that during the week, Japanese AI-related stocks collectively declined, dragged down by a downturn in U.S. tech giants; SoftBank Group Corp also fell due to market concerns about OpenAI potentially delaying its IPO until next year.
The Nikkei 225 Index, which has a heavy weighting in technology stocks, fell 2.7% over the week.
Among the decliners, shares of SoftBank, memory chip maker Kioxia Holdings Corp, and optical fiber manufacturer Furukawa Electric Co., Ltd. all dropped by more than 12%.
However, even after last week's pullback, the Nikkei 225 still recorded its best-ever quarterly gain, driven by the global AI boom.
Yet, the rapid surge in this sector has raised market concerns about the sustainability of valuations, making it more vulnerable to sharp volatility and deep corrections.
Sando believes, "Given the substantial net selling by foreign investors in the spot market, the rotation of capital into technology stocks may have already concluded. A pause in foreign buying will constrain the upside for Japanese stocks—and short-term capital often turns to selling when upward momentum stalls. Combined with the margin positions of retail investors, the current supply-demand balance is not optimistic."
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