In May 2026, Japanese investors net sold 2.72 trillion yen (about 169.8 billion USD) in overseas stocks, marking their largest monthly net outflow since April 2021, while increasing overseas bond holdings by 2.9 trillion yen, the highest monthly bond purchase since May 2025. A spokesman for Japan's Ministry of Finance said investors are reallocating from volatile equities to fixed income due to rising geopolitical risks and concerns in the tech sector [1, 2].
Data from the Japanese Ministry of Finance and Bank of Japan showed Japanese investors had bought a combined 1.91 trillion yen of U.S. stocks and 826.4 billion yen in European stocks in the first four months of 2026 [1, 2].
In the week ending June 5, 2026, Bank of America Securities clients sold U.S. tech stocks in record amounts, the largest outflow since 2008. The sell-off was driven mainly by institutional investors, but hedge funds and retail investors also participated, said BofA strategist Jill Carey Hall. The withdrawals totaled about 142 billion USD. The S&P 500 index fell 2.6% that week, its largest one-week drop since April 2025 [3, 4, 5].
Although large-cap tech stocks faced heavy sales, inflows shifted toward small- and mid-cap stocks as well as industrial, real estate, and utilities sectors among BofA clients [4, 5]. Asian markets also saw heavy foreign investor selling in June 2026. Asia-Pacific equities experienced net outflows of 270.8 billion USD, driven by escalating Middle East conflicts and pullbacks in AI technology stocks. South Korea and Taiwan were hit hardest [6].
Foreign investors also pulled 266 billion USD from emerging markets in May 2026, primarily from equities, while bond inflows continued according to data from the Institute of International Finance [7]. Japanese stocks saw continued foreign selling in early June, with 701 billion yen net sales in the week ending June 6, adding to the prior week’s 491.5 billion yen outflow [8]. The Nikkei 225 index fell more than 1,800 points intraday, a roughly 3% drop, amid profit-taking in AI and semiconductor sectors amid geopolitical tensions and strong U.S. employment data [1, 8].
On June 8, the Taiwan stock market suffered a severe one-day drop of 1,568 points (3.48%) and an intraday swing of 2,694 points. The declines were linked to global U.S. tech sell-offs and geopolitical risks affecting the AI sector. Taiwanese financial analyst 吴嘉隆 said, "Today’s big drop is nothing; I have seen worse in New York. Big drops are buying opportunities, especially in stocks like TSMC." [2, 6, 7, 9, 8]
Some asset managers remain optimistic about the mid-to-long-term prospects for AI-related sectors in Asia, recommending selective focus on AI technology and exports despite near-term volatility [10].
The weeks ahead will be closely watched as foreign investors’ net selling in Japanese stocks continues and Asian markets adjust to evolving geopolitical tensions and global tech sector shifts.
