Record Foreign Inflows into Japanese Assets in April as Investors Flee U.S. Markets

Historic Surge in Investment into Japanese Markets

In April, Japan experienced record-breaking net foreign inflows into its equities and long-term bonds as global investors pulled out of U.S. markets amid rising trade tensions triggered by former President Donald Trump’s aggressive tariff measures.

According to Japan’s Ministry of Finance, overseas investors purchased ¥8.21 trillion ($56.6 billion) worth of Japanese assets — the largest monthly net inflow since records began in 1996, according to Morningstar.

“Trump’s tariff shocks likely altered global investors’ view on the U.S. economy and led to diversification toward other major markets including Japan,” said Yujiro Goto, Head of FX Strategy at Nomura.

Yields and Market Performance Diverge

The bulk of the inflows came in the first week of April, coinciding with Trump’s “reciprocal” tariff announcement. In the aftermath:

U.S. 10-year Treasury yield surged by 30 basis points (Apr 3–9)

Japan’s 10-year yield dropped by 21 basis points (Apr 2–8)

Despite global market volatility, Japan’s Nikkei 225 gained over 1% for the month, while the S&P 500 dipped nearly 1%.

Institutional Investors Lead the Charge

The inflows were primarily driven by institutional investors, including:

Pension funds

Life insurance firms

Reserve managers

“It was quite an exceptional month, considering everything happening in the macroeconomic environment,” said Kei Okamura, SVP and Japanese equities portfolio manager at Neuberger Berman.

What’s Next for Japanese Assets?

While analysts expect slower inflows due to recent progress in U.S.-China trade talks, sentiment toward Japanese assets remains fundamentally positive.

“Trump’s erratic policies have undermined U.S. credibility, leading global fund managers to favor alternative markets,” said Vasu Menon, Managing Director of Investment Strategy at OCBC.

Japan’s ongoing tariff discussions with the U.S. and prospects of reduced 24% “reciprocal” tariffs are also fueling optimism.

Corporate Governance Reforms Boost Investor Confidence

One of the biggest long-term catalysts is the Tokyo Stock Exchange's corporate governance reforms, introduced in March 2023. These reforms require companies trading below a price-to-book ratio of 1 to “comply or explain.”

According to Asset Management One International, this move has driven record share buybacks in Japan, improving earnings per share and boosting stock prices.

Currency Dynamics and Economic Rebound

As the Japanese economy rebounds and the yen shows potential to strengthen, experts argue that it makes even more sense to shift portfolio allocation toward Japan.

“This trend has legs. Japan will likely continue to see healthy inflows,” said Okamura.

Conclusion

The April surge in foreign investment into Japan may not be sustained at the same magnitude, but analysts agree: Japanese assets remain highly attractive amid global uncertainty, improving corporate practices, and a shifting economic landscape. For global investors seeking stability and long-term value, Japan is back on the radar.