Foreign investors have ramped up their purchases of Japanese equities, betting on potential fiscal stimulus under Liberal Democratic Party (LDP) leader Sanae Takaichi, who is seen as a leading contender to become Japan’s next prime minister.
Data from Japan’s Ministry of Finance showed that overseas investors bought a net 1.89 trillion yen ($12.59 billion) worth of Japanese stocks in the week ending October 11, following a record 2.48 trillion yen purchase the previous week. The surge reflects optimism that Takaichi’s fiscal policies could revive government spending and economic growth.
Although the ruling LDP’s coalition with Komeito collapsed after 26 years, Takaichi’s prospects brightened as the Japan Innovation Party signaled willingness to form a new alliance. Investors appear to be pricing in the likelihood of continued stimulus and economic support under her potential leadership.
Foreign investors also expanded their holdings in Japanese bonds, purchasing 199.4 billion yen in long-term securities and 1.52 trillion yen in short-term bills. Meanwhile, Japanese investors turned net buyers of foreign assets, investing in overseas stocks and bonds after several weeks of selling.