Japanese investors sold a large amount of overseas stocks in May, marking the largest net sell-off in five years

As the situation in the Middle East escalated and market concerns grew over the rapid rise of technology stocks, Japanese investors significantly reduced their holdings of overseas stocks in May, with the net selling volume reaching a new high in the past five years.

Reuters reported that data released by Japan's Ministry of Finance on Monday (June 8) showed that Japanese investors net sold 2.72 trillion yen worth of overseas stocks in May, marking the largest single-month net outflow since April 2021.

Meanwhile, the global stock market index MSCI World Index reached a record high of 1138.3 points last week, but has since dropped by approximately 2.9% so far this month. After the release of strong US employment data, funds withdrew profits from popular AI-related technology stocks, further dampening risk appetite.

Contrary to the stock market, Japanese funds have significantly increased their holdings in the bond market. In May, Japanese investors net purchased 2.9 trillion yen of foreign bonds, reaching the highest level since May 2025.

From the perspective of the type of funds, the data from the Ministry of Finance shows that in May, trust accounts sold 3.38 trillion yen worth of overseas stocks and simultaneously invested 3.16 trillion yen in the overseas bond market.

Investment trust management companies and life insurance companies have taken different approaches: In May, they respectively net purchased 614.6 billion yen and 7.75 billion yen worth of overseas stocks.

Another set of data from the Bank of Japan shows that in the first four months of this year, Japanese investors collectively purchased 1.91 trillion yen worth of US stocks and 826.4 billion yen worth of European stocks.

At the same time, the net purchase amounts for the British and Spanish stock markets were 285.5 billion yen and 80.1 billion yen respectively, indicating that Japanese funds have been continuously reallocating across regions and asset classes.