Japanese stocks attracted the largest weekly foreign inflow in more than three months in the week through Jan. 25, driven by optimism over global AI investments that boosted investor sentiment and fueled a rally in the local technology sector.

According to data from Japan’s Ministry of Finance, foreigners snapped up a net 753 billion yen ($4.87 billion) of Japanese shares last week, their largest weekly net purchase since Oct. 12, 2024.

Last week, U.S. President Donald Trump’s announcement of a private sector investment of up to $500 billion in AI infrastructure drove shares of Japan’s SoftBank Group up by about 16%, boosting demand across the broader technology sector. Consequently, the Nikkei share average surged about 3.85%.

However, the index lost 0.65% this week as surging interest in Chinese startup DeepSeek’s low-cost artificial intelligence model triggered a selloff in AI-related stocks.

Last week, foreigners net bought Japanese debt securities for a fourth successive week with about 608.5 billion yen in net purchases. They acquired short-term bills worth 481.3 billion yen and 127.2 billion yen of long-term bonds on a net basis.

Japanese investors, meanwhile, were net buyers of foreign equities for the seventh successive week with net purchases to the tune of 217.2 billion yen.

They also racked up long-term foreign bonds of 178 billion yen and short-term securities of 119.2 billion yen, extending net purchases into a third successive week.

The Bank of Japan raised interest rates last Friday to their highest since the 2008 global financial crisis and revised up its inflation forecasts, underscoring its confidence that rising wages will keep inflation stable around its 2% target.

Reuters