Japan retail selling hits decade high as investors put faith in US markets

Retail investors in Japan are dumping local stocks at the fastest pace in more than ten years while pushing fresh cash into overseas markets, according to data from Japan Exchange Group and the Investment Trusts Association, Japan.

Through November 2025, Japanese retail investors sold a net ¥3.8 trillion, equal to $24.3 billion, in domestic equities and related investment trusts. Over the same period, the Topix index jumped about 25%. Despite that rally, retail investors in Japan kept selling.

At the same time, buying of foreign stocks through investment trust funds stayed close to ¥9.4 trillion, near the record set in 2024. The flow shows sustained demand for overseas assets and steady confidence in US markets under President Donald Trump’s second term.

Retail investors keep selling local stocks despite a strong rally

The heavy selling happened while company earnings held firm and pro-growth policies stayed in place under Prime Minister Sanae Takaichi. The Topix gain in 2025 marked its largest outperformance of the S&P 500 in yen terms since 2015. Even so, households in Japan chose foreign exposure instead of domestic shares.

The weaker yen boosted the value of overseas equities when priced back into local currency. That math made US stocks look more attractive to retail traders in Japan, and the outflow of funds also put extra pressure on the yen itself.

At the same time, the Bank of Japan raised interest rates and PM Takaichi Sanae increased fiscal spending to support growth.

Adarsh Sinha, global head of G10 rates and FX strategy at BofA Securities, called the trend unusual. “The outflow has been unprecedented,” Adarsh said. He pointed to tax-free investment accounts known as NISA, which helped speed up purchases of foreign equities.

“It’s been the reason that the yen has been much weaker for longer than people generally expect,” he said. Policymakers had aimed to move households from savings into domestic investing, but retail behavior in Japan has gone the other way.

Japan’s currency stays under pressure as global markets set direction

Meanwhile, JPMorgan and BNP Paribas SA expect the yen to weaken to 160 per dollar or beyond by the end of 2026, thanks mainly to structural gaps.

Japan’s benchmark 10-year yield sits about two percentage points below US Treasuries, and inflation-adjusted rates remain negative, limiting appeal for yield-focused investors.

But Japan’s Nikkei 225 is set for a stronger open today after the holiday break, with futures trading at 51,075 in Chicago and 50,620 in Osaka, compared with a last close of 50,339.48. Australia’s ASX/S&P 200 rose 0.21%. Hong Kong’s Hang Seng futures traded at 26,442, above the previous close of 26,338.47. South Korea’s KOSPI jumped 2.46%, while other major indexes in the region were flat.

Hideyuki Ishiguro, chief strategist at Nomura, said, “Some retail investors are excessively overweight US stocks, making their portfolios vulnerable to potential tech selloffs.” Hideyuki added that stretched valuations in the technology sector mean 2026 should be a year to rethink asset diversification.

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