Japanese investors made their biggest shift toward overseas equities in five months in August, pouring ₹1.3 trillion ($8.45 billion) into foreign shares while cutting holdings of overseas bonds, according to Ministry of Finance data reported by The Economic Times. The net purchases of foreign equities were the largest since ₹2.22 trillion in March, driven by strong global earnings and AI optimism that boosted risk appetite among investors.
The investment shift came as Japanese investors sold a net ₹1.02 trillion of foreign short-term debt and ₹143 billion of long-term bonds, marking the largest monthly net sales of overseas bonds in five months, as reported by The Economic Times. This pullback from overseas bonds was triggered by a sharp selloff in global debt markets, with long-term yields rising on concerns over inflation, heavy government borrowing and the prospect of tighter monetary policy.
The move coincided with a robust global earnings season, with data for roughly 94% of companies in the MSCI All Country World Index showing average year-on-year earnings growth of 43.6%, while results beat analysts' estimates by about 9.1%, according to LSEG data reported by The Economic Times. AI optimism remained strong, with Nvidia forecasting revenue would rise about 70% in its next fiscal year, underscoring continued demand for AI computing.
Japanese investment trust management companies were the biggest buyers of overseas equities, purchasing a net ₹1.35 trillion in August, while life insurers bought ₹24.9 billion of foreign shares, as reported by The Economic Times. Both groups reduced their foreign bond exposure, with investment trusts selling ₹30.1 billion of long-term bonds and life insurers selling ₹137.3 billion. In contrast, pension funds moved in the opposite direction, buying ₹2.33 trillion of foreign bonds and ₹567.1 billion of overseas equities.
Separate Bank of Japan data showed Japanese investors bought ₹1.22 trillion of U.S. stocks and ₹1.1 trillion of European shares through the end of July, according to The Economic Times. British equities drew ₹284.5 billion of Japanese net purchases over the period, while French stocks saw ₹23.06 billion in net purchases, and German shares experienced ₹322.3 billion in net sales. The contrasting flows point to a rotation within foreign assets rather than a broad retreat from overseas markets.
Japanese financial giants are increasingly using Indian wealth managers as a gateway to the country's wealthy families, with four major institutions investing in the segment since 2023. Daiwa Securities has built its presence through multiple investments in Ambit, with Ambit Global Private Client managing close to ₹88,000 crore for ultra-high-net-worth families. MUFG Bank co-led a ₹400 crore funding round in Neo Wealth in August 2024, while Mizuho Securities agreed to acquire 61.6%-78.3% of Avendus from KKR for up to ₹4,700 crore in December 2025. The investments come amid broader Japanese expansion, with companies announcing $12.5 billion of investments through around 120 agreements during Prime Minister Sanae Takaichi's visit to India in July.
