Foreigners Were Buyers of Japanese Stocks for 3 of the Last 4 Weeks - A Positive for the Nikkei

With Japanese equities having horribly underperformed of late (only 25% of Japanese stocks have outperformed the MSCI World Index YTD), we might be seeing the signs of some early bottom feeding by foreign investors (first table below). For three of the last four weeks now we have seen foreign buying of Japanese stocks on net (first chart below). Importantly, the longer term moving average of net foreign purchases of Japanese equities seems to have decisively changed direction and is nearly positive over the last twelve weeks (second chart below). The direction of this trend usually correlates pretty well with the 1-quarter percent change in the Nikkei, meaning that if the trend of foreign buying continues we may see some sort of catch up attempt by Japanese stocks.