Insights 
VT 
Foreign investment in Japanese stocks increased from ¥752.6 billion to ¥1,344.2 billion as of 24 October. This rise shows a growing interest in Japan’s financial markets.
Throughout the month, the influx of capital continued to grow, attracting more global attention. The substantial increase in investments reflects the current attraction of Japan’s stocks.
Economic Activity Trends
These numbers signify a period of heightened economic activity. This trend may influence both domestic and international market dynamics in the upcoming months.
We are seeing a clear bullish signal with foreign investment into Japanese stocks nearly doubling to ¥1344.2B in the report for the week of October 24th. This substantial inflow of capital suggests that international money managers see value and upward momentum in the Japanese market. Such a sharp increase is often a leading indicator for positive price action in the weeks to come.
This flood of foreign cash coincides with the Nikkei 225 recently breaking through the 42,000 resistance level, a move that has been sustained for several days. The yen’s weakness, currently trading near 165 to the U.S. dollar, is a major catalyst, making Japanese equities appear cheap to foreign investors. This currency advantage provides a strong tailwind for the market that we expect to continue.
Investment Strategies
Given these conditions, derivative traders should consider buying call options on the Nikkei 225 index or related ETFs with expirations in December 2025 and January 2026. The strong inflow provides a solid foundation for a continued rally, and call options offer a leveraged way to profit from this anticipated upward movement. We should be looking at strike prices slightly above the current market to maximize potential gains.
Another strategy to consider is selling out-of-the-money put spreads on individual large-cap Japanese exporters who benefit most from the weak yen. Companies in the automotive and electronics sectors have shown strong earnings, and recent data shows Japan’s exports rose 5.4% year-over-year in September. This approach allows us to collect premium while defining our risk, capitalizing on the view that a significant downturn is unlikely in the near term.
Historically, we saw a similar surge of foreign investment back in 2013, which kicked off a multi-year bull run fueled by supportive central bank policy. That period also saw the yen weaken considerably, creating a profitable environment for equity investors. The current data suggests we may be in the early stages of a comparable cycle.
