Key points:

  • The Japanese yen significantly weakened due to “dovish” statements from the Prime Minister regarding the continuation of a loose monetary policy.
  • The weakening of the yen boosted the attractiveness of Japanese exporters and encouraged foreign investors to purchase Japanese stocks.
  • European stocks showed positive dynamics, following Asian markets.

Foreign investors increased their interest in Japanese stocks. This was driven by the weakening of the yen, triggered by statements from Prime Minister Shigeru Ishiba, which were perceived by the market as “dovish.” This led to a rise in the appeal of Japanese exporters in the eyes of foreign investors.

According to data from the Ministry of Finance, during the specified period, net purchases of Japanese stocks by foreign investors amounted to 919.3 billion yen ($6.16 billion), the highest figure since April 13.

The yen declined sharply against the dollar

The Japanese yen showed significant weakening throughout last week, losing about 4.4% against the U.S. dollar. This marked the largest drop since December 2009. The cause of this trend was statements by Prime Minister Shigeru Ishiba, who ruled out the possibility of further interest rate hikes in the near future. The reduction in concerns about monetary tightening led to the weakening of the national currency.

Foreign investors made substantial changes to their positions in the Japanese stock market in the second half of the year. After significant net purchases of Japanese stocks amounting to about 6 trillion yen in the first half of the year, foreign investors became active sellers in the second half, selling Japanese stocks worth about 5.42 trillion yen.

Stock market trading data shows that foreign investors continue to show interest in the Japanese stock market. They invested around 395.55 billion yen in Japanese cash equities. At the same time, Japanese investors were actively purchasing foreign stocks. Over the past week, net purchases by Japanese investors amounted to 257.8 billion yen, the highest figure in the last four weeks.

European stocks followed Japanese markets

European stock indices posted slight gains on Thursday, following the positive dynamics of Asian markets. Investors were optimistic about the prospects of increased stimulus from Chinese authorities and eagerly awaited the release of U.S. inflation data, which could shed light on the future monetary policy of the Federal Reserve.

The STOXX 600 index, reflecting pan-European trends, rose by 0.1% at 07:13 GMT. The positive dynamics were driven by gains in healthcare and telecommunications sectors, while the technology sector slightly dampened the overall positive sentiment.

Among individual companies, British pharmaceutical giant GSK stood out, with its shares jumping by about 6%. The reason for the rise was the settlement of U.S. lawsuits related to the drug Zantac. The settlement amount was lower than analysts had expected, which positively impacted the company’s stock prices.

In contrast, shares of German automaker BMW fell by 0.7%. The negative trend was driven by third-quarter results that fell short of expectations. The company faced challenges in the Chinese market and supply chain disruptions.