Chip Supplier’s Win Streak Shows Foreigners Returning to Japan
(Bloomberg) -- Foreign funds piling into Japanese stocks drove a record 15th-day rally in Tokyo Electron Ltd., one of the world’s biggest suppliers of chipmaking equipment.
The stock gained 1.6% to close at a record high on Wednesday, and has soared 26% since Aug 25. Tokyo Electron is benefiting from both investor demand for chip-related stocks as well as a pivot by traders from the U.S. to Japan’s cheaper equities, analysts said.
Tokyo Electron’s rally is “symbolic” of foreign traders buying into Japanese equities, said Shuji Hosoi, a strategist at Daiwa Securities Co. “Foreign investors have been buying into Japanese large-cap and tech stocks since the end of August. They’re avoiding U.S. markets amid concerns of tapering and the money is shifting to Japanese equities instead,” he said.
Overseas investors were net buyers of 662.7 billion yen ($6 billion) worth of Japanese equities and futures in the week through Sept. 3, the most since February, according to data from the Japan Exchange Group Inc. Market observers are hopeful of a continued inflow from overseas amid optimism over a new government and declining Covid-19 infections as the vaccination rate rises.
Concerns over the macroeconomic outlook may be nudging investors to buy into chip-related stocks, which are still benefiting from demand related to 5G technology, digital transformation, automobile electrification and decarbonization, said Kazuyoshi Saito, a senior analyst at Iwai Cosmo Securities Co. in Tokyo. He added that Tokyo Electron’s rally may soon “pause for a breather” in the short term.
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