Headline: U.S. Investors Rotate Into Japan as Nikkei Tops S&P 500 on Tech and AI Momentum
U.S. fund managers are stepping up exposure to Japanese equities, drawn by the market’s standout performance and growing leadership in technology and artificial intelligence stocks. Strategists at Goldman Sachs say the pace of foreign inflows is accelerating, approaching levels last seen in the early Abenomics years.
Goldman’s Japan equity team notes that participation from U.S. investors is the strongest since late 2022, with rising client engagement and increased interest in growth and technology shares after a long stretch of value leadership. Japan’s market-friendly reforms and a sustained corporate-governance drive have reinforced the appeal of domestic companies, while foreign ownership remains below prior peaks, leaving room for additional buying.
The Nikkei 225 has gained roughly 30% this year in dollar terms, outpacing the S&P 500’s 14% advance. A firmer yen and optimism around Japan’s pro-stimulus policy backdrop have supported sentiment. While strategists flag the possibility of short-term consolidation after the rally, ongoing foreign inflows—particularly into tech and AI—could extend Japan’s outperformance and broaden global equity leadership beyond U.S. megacaps.
Key Points – U.S. investors are increasing allocations to Japanese equities, focusing on technology and AI stocks. – Goldman Sachs highlights the fastest foreign inflow momentum since the early Abenomics period. – Engagement from U.S. funds is at its highest since October 2022, with more client meetings and interest. – Japan’s corporate-governance reforms and pro-investor policies are supporting market sentiment. – The Nikkei 225 is up about 30% YTD in dollar terms, beating the S&P 500’s roughly 14% gain. – Strategists see potential short-term consolidation but expect further upside as foreign inflows continue.
