Japanese savers and mega funds crowd into US tech, raising yen risks and concentration fears
Japanese retail investors are dumping domestic stocks and piling into US tech just as the world’s biggest sovereign and pension funds ramp up their own bets on America’s AI trade.
According to Bloomberg, Japanese individuals sold a net ¥3.8tn of local equities and related investment trusts through November 2025, the most in more than a decade, even as the Topix index gained about 25 percent last year.
Over the same period, their net buying of overseas stocks via investment trust funds hovered near 2024’s record-high ¥9.4tn, helped by a weaker yen that boosts the value of foreign holdings in local currency terms.
One retail investor quoted by Bloomberg, 36‑year‑old Ryohei Kobayashi, invests almost exclusively in American stocks and runs a wealth‑focused YouTube channel with more than 850,000 subscribers.
“I simply see greater potential in US equities,” he said, adding that this is “especially the case now, when major tech companies like the Magnificent Seven may come to dominate growth in the AI sector.”
Bloomberg reported that this sustained flow of funds out of Japan adds weakening pressure on the yen.
The currency may also face the impact of Bank of Japan rate increases and more government fiscal spending, even as policymakers try to push households from saving into investing and direct more capital to domestic companies.
“The outflow has been unprecedented,” said Adarsh Sinha, global head of G10 rates and FX strategy at BofA Securities, as cited by Bloomberg.
He said the expansion of tax‑free NISA accounts has accelerated foreign equity purchases and “been the reason that the yen has been much weaker for longer than people generally expect.”
This is happening despite a strong domestic market backdrop.
Bloomberg reported that Japanese equities rallied in 2025 on resilient earnings and a pro‑growth policy stance under Sanae Takaichi’s administration, with the Topix’s 25 percent rise marking its biggest outperformance of the S&P 500 in yen terms since 2015.
Yet JPMorgan Chase & Co. and BNP Paribas SA still expect the yen to weaken to 160 per US dollar or beyond by the end of 2026, according to Bloomberg, citing Japan’s 10‑year bond yield remaining about 2 percentage points below US Treasuries and real rates that are still negative after inflation.
Some strategists see concentration risk building.
Bloomberg reported that Hideyuki Ishiguro, chief strategist at Nomura Asset Management Co., warned that many Japanese retail investors are excessively overweight US stocks and vulnerable to a tech sell‑off.
With ongoing concerns about rich technology valuations, he said 2026 should be a year to rethink asset diversification.
He linked the persistent contrarian bias to decades of range‑bound Japanese markets. “Those old fixed ideas are deeply ingrained,” he said, adding that selling by retail investors will probably continue.
At the institutional level, the same US‑ and AI‑centric pattern is playing out.
Reuters reported that sovereign wealth and public pension fund investors put about US$132bn — roughly half of their total investments last year — into the United States in 2025, even as big emerging markets saw investment fall almost one‑third from 2024.
These investors, together with central banks, oversaw a record US$60tn in assets under management, with sovereign wealth funds providing about two‑thirds of the capital deployed into the US.
“There was a change in paradigm when it comes to recipient countries,” Global SWF managing director Diego Lopez wrote in the firm’s annual report, as cited by Reuters, saying the US benefited from spending focused on digital infrastructure, data centres and AI companies.
Sovereign wealth fund assets alone hit a record US$15tn, while overall sovereign wealth fund investments rose 35 percent to US$179.3bn.
The report also underscored just how crowded the AI trade has become.
Reuters said the investment flow figures do not include an estimated US$2.2tn already held by sovereign wealth and pension funds in “Magnificent 7” stocks — Apple, Microsoft, Alphabet, Amazon, Nvidia, Meta and Tesla.
On the allocators’ side, Reuters reported that Saudi Arabia’s Public Investment Fund, with US$36.2bn committed (80 percent earmarked for a takeover of games maker Electronic Arts), and Abu Dhabi’s Mubadala, with a record US$32.7bn, were the top two spenders.
Gulf funds including PIF, Abu Dhabi‑based L’imad Holding Company PJSC and Qatar Investment Authority are also key financial backers of Paramount Skydance’s hostile bid for Warner Bros Discovery.
Canada’s CPP and La Caisse, alongside Singapore’s GIC, rounded out the top five spenders.
