Last week, the Japanese stock market declined due to factors such as geopolitical tension in the Middle East, US interest rate trends, and uncertain prospects for the chip industry. However, Japanese retail investors seized the opportunity and bought a record number of domestic stocks. According to data from the Japan Exchange Group, their net increase in cash stock holdings was 909 billion yen (about 5.84 billion US dollars), breaking the record of 754 billion yen set in March last year.

According to Kei Okamura, senior vice president of Neuberger Berman East Asia, “Domestic retail investor interest in Japanese stocks has increased significantly as the Nikkei 225 Index hits a record high.” Driven by multiple factors, the weak yen, rising hopes for improved corporate governance, and the beginning of inflation, the Nikkei Index rose to its highest point in history since 1989 earlier this year.

It is worth mentioning that with the Nikkei 225 Index breaking the 40,000 mark for the first time at the beginning of last month, Japanese retail investors began to actively buy domestic stocks, showing confidence in the market.

According to data from the Japan Exchange Group, individual investors made net purchases of 327 billion yen (about 2.2 billion US dollars) of cash stocks in the week ending March 14, while foreign investors also increased their holdings by 176 billion yen, which jointly boosted the activity of the market.

According to information, Japanese retail investors are famous for their reverse trading style. They buy when the stock market falls and sell when the stock market rises. Stock exchange data shows they are more enthusiastic about buying Japanese stocks this year than in previous years.

Meanwhile, Japan's TSE Index recorded its biggest weekly decline in nearly two years last week, in line with the downward trend in global stock markets. Among them, the biggest selling pressure came from foreign investors. They had a net sale of 592.5 billion yen of Japanese stocks last week, the biggest net sale since September last year. The total sell-off amount, including futures, reached 1.135 trillion yen, breaking the 1 trillion yen mark for the second time since this year.

Overall, despite many challenges and uncertainties, the complex dynamics of the Japanese stock market reveal behavioral differences between retail investors and foreign investors. The active participation of retail investors not only highlights their trust in the local market, but may also be an expectation of a future market rebound.

Editor/Jeffrey