EPFR data shows that in the week ending in late October, Japanese equity funds saw net inflows exceeding $6 billion, marking the fourth time on record that this level has been surpassed and the first time since late April. Cumulative net inflows since 2026 have exceeded $33 billion, equivalent to 2.8% of the assets under management of these funds. However, the structure of this round of inflows is noteworthy: over half flowed into funds tracking the Nikkei 225 index, second only to the record set in 2019; inflows into leveraged Nikkei funds rose to a 16-week high, ending three consecutive weeks of net outflows. In contrast, funds tracking the MSCI Japan index previously showed more stable inflows. Data shows that this round of inflows into the Japanese stock market not only reflects long-term allocation demand but also includes significant index trading and leveraged fund activity. If market volatility intensifies, leveraged funds may quickly reverse course, so whether the massive weekly inflows can translate into sustained allocation is a key focus going forward.
