Korean investors’ Japanese stock purchases hit record in first half

A picture illustration shows Japanese 10,000 yen notes. [Photo by Reuters/Yonhap]

South Korean investors made a record number of Japanese stocks in the first half of this year as interest in the sshares increased due to an improvement in the Japanese economy and a weak yen.

According to Korea Securities Depository (KSD) on Monday, the number of Japanese stock purchases by domestic investors from the beginning of this year until the end of last month was 44,752, an increase of 70 percent from 26,272 in the first half of last year. The number of purchases in the first half was the highest since relevant data were compiled in 2011.

On a monthly basis, the number of purchases last month hit a record of 14,494, surpassing the previous high of 7,757 in May in just one month.

The volume of Japanese stock purchases also surged. Domestic investors purchased a net $132 million worth of Japanese stocks in the first half of the year, up 1,220 percent from the same period last year when it was $10 million. This is the largest amount in nearly two years since the first half of 2021 when it was $345 million.

At the end of June 29, the value of Japanese stocks held by domestic investors stood at about $3.13 billion, an 18 percent increase from $2.61 billion at the end of last year.

“As Japan’s gross domestic product (GDP) growth rate exceeded expectations in the first quarter, investors may have paid attention to Japanese stocks on expectations that the Japanese economy will recover gradually,” said Moon Nam-joong, an analyst at Daishin Securities Co.

“Warren Buffett’s investments in Japanese companies, as well as the current weak yen, also attracted domestic investors to Japanese stocks,” Kang Jae-hyun, an analyst at SK Securities Co., also said.

During his visit to Japan in April, U.S. business magnate and investor Warren Buffett hinted at the possibility of additional investment by Berkshire Hathaway Inc. in Japanese stocks, including shares in trading companies.

In fact, it has been confirmed that a subsidiary of Berkshire Hathaway increased its stake in five Japanese trading companies to an average of over 8.5 percent last month.

However, there are views that the upward trend in the Japanese stock market is unlikely to continue.

“The Bank of Japan (BOJ) lowered its growth forecast for the Japanese economy at its monetary policy meeting in April,” said Daishin Securities’ Moon, adding that this shows downside risks to the Japanese economy remain.

“The upward trend in the Japanese stock market is unlikely to continue with consistency,” Moon said. “It will not be too late to respond to the trend in the Japanese stock market after confirming the guidelines related to the BOJ’s yield curve control policy to be presented to the market in the third quarter.”

“With the current weakening of the yen near its lows, it is difficult to expect a significant further decline in the exchange rate,” said Hwang Se-hoon, a senior analyst at Korea Capital Market Institute. “In a situation where there is no clear momentum for Japanese stocks to rise, it is unlikely that the buying trend seen in the first half will continue.”