Foreign Investors are Flocking Back to Japan

For 15 months, between March 2013-June 2014, foreign investors were net sellers of Japanese equities. It seems, however, the tide has turned. Over the last few weeks foreign investors have started accumulating Japanese shares (first chart below). For those invested in Japan this is a welcome development. As the second chart below shows, 1-quarter percent changes in the Nikkei correlate well with foreign investment flows into Japanese stocks.