Record buying! Amid the plunge in April, Japanese pensions are frantically "bottom-fishing" overseas stocks
In April, as global markets were turbulent due to trade war concerns, Japanese pension funds went against the trend and significantly increased their purchases of overseas stocks, with a net purchase of foreign securities totaling 2.76 trillion yen (approximately 18.9 billion USD). Japanese investors net bought foreign stocks for the sixth consecutive week in April, indicating a strategy to take advantage of the market downturn. Despite the stock market crash and the appreciation of the yen, which investors viewed as a buying opportunity, experts warned that this trend could put pressure on the Japanese stock market
In April, as global markets were turbulent due to trade war concerns, Japan's pension fund agency went against the trend and significantly increased its purchases of overseas stocks.
According to preliminary data released by Japan's Ministry of Finance on Monday, in April, the net purchase of foreign securities by bank trust accounts reached 2.76 trillion yen (approximately 18.9 billion USD).
It is worth mentioning that previous data also indicated this buying trend. The Ministry of Finance's data showed that in the last week of April, Japanese investors net invested 133.8 billion yen (920.85 million USD) in foreign stocks, marking the sixth consecutive week of net purchases.
This figure is astonishing, occurring during a time of market panic, with global concerns about the trade war escalating, and Trump's tariffs shocking global markets. The MSCI Global Stock Index plummeted more than 7% in the first week of April, and the yen, as a safe-haven asset, surged accordingly.
Notably, Japanese investors had already begun to significantly increase their holdings in U.S. stocks before bottom-fishing in overseas markets. In March, Japanese investors net purchased 2.12 trillion yen of U.S. stocks, setting a record high since comparable data became available in 2005.
During that month, the S&P 500 index, calculated in yen, fell 6.1%, marking the largest decline since December 2022. This indicates that Japanese investors had already started positioning themselves in anticipation of market declines.
Jumpei Tanaka, head of investment strategy at Pictet Asset Management Japan Ltd., stated:
In April, the stock market temporarily plummeted, and the yen appreciated, leading many investors to see it as a good opportunity to buy on dips. However, he also warned that if this trend continues, it could put pressure on the Japanese stock market.
There are trends indicating that foreign interest in Japanese stocks and bonds has also cooled. In the last week of March, the inflow of funds into Japanese long-term bonds dropped to 60 billion yen, a significant decrease from the previous week's net purchase of about 1 trillion yen. As of the time of writing, the yield on Japan's 30-year government bonds has risen to its highest level in nearly 25 years.
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