TOKYO: For American investors, Japanese stocks are starting to make sense.
After trailing U.S. shares for six years in dollar terms, the Topix index is finally beating them, rising 8.2 percent this year through Thursday compared with a 0.3 percent advance for the Standard & Poor’s 500 Index. Overseas buyers have snapped up $17.7 billion in Japanese shares and futures in four weeks, Tokyo and Osaka bourse data show, as the Topix rallies without a tumbling yen eating into gains.
How much has a falling yen penalized investors in the past? In 2013, when Japanese shares posted the biggest advance this century during Prime Minister Shinzo Abe’s first year back in office, investors denominated in dollars would’ve been better off in the S&P 500. Now, with U.S. shares the third-worst performer this year among 24 developed markets, money is shifting to Tokyo.
“This is the first time in a long time that the Topix has outperformed the S&P 500 in dollar terms,” said Richard Whittall, a fund manager at Alltus Capital (U.K.) in Singapore. “That’s making foreigners think Japan is very interesting. Suddenly we have this amazing situation where there are no natural sellers in the market.”
After offloading Japanese cash equities in five of the first six weeks this year, overseas investors became net buyers for four straight weeks through March 6, according to the latest available data. They purchased 647.8 billion yen ($5.34 billion) of stocks in Tokyo and Nagoya, according to the Tokyo bourse. They also bought a net 1.5 trillion yen in large Nikkei 225 Stock Average and Topix futures contracts over the period, Osaka exchange data show.
