Foreign buying of Japanese shares was ¥2 billion on 3 April. This compares with ¥-4 billion previously.
The latest reading shows a swing of ¥6 billion. It moved from net selling to net buying.
Foreign Flows Turn Positive
We are seeing a notable shift in sentiment as of April 3rd, with foreign investors turning into net buyers of Japanese stocks. This ¥2 billion inflow marks a reversal from the previous period’s ¥4 billion outflow. This could be an early signal that foreign capital is starting to rotate back into the market.
This inflow comes as the yen continues to show weakness, with the USD/JPY rate hovering around the 162 level. A cheaper yen makes Japanese equities more attractive for overseas buyers and boosts the earnings of Japan’s large exporters. The Bank of Japan has also signaled it will remain accommodative, creating a supportive environment for stocks.
The Nikkei 225 has been consolidating near the 44,500 mark after its strong performance last year. We saw foreign inflows precede major rallies throughout 2025, suggesting this could be a catalyst for the next move higher. Ongoing corporate governance reforms continue to be a major long-term incentive for investment.
Given this, we should consider positioning for a potential upside breakout. Buying Nikkei 225 call options offers a defined-risk way to capture gains if the index climbs in the coming weeks. Implied volatility has been relatively subdued during this consolidation, making option premiums more affordable.
For those looking at a more direct play, long positions in Nikkei futures could be initiated. To manage the currency exposure, this could be paired with a long USD/JPY position through futures or options. This strategy benefits from both a rising stock market and a weakening yen.
