JPMorgan: The foreign exchange hedging ratio is at a low level, and the Japanese stock market welcomes record foreign inflows.

According to data from J.P. Morgan, foreign investors bought a net 6.2 trillion Japanese yen of Japanese stocks in October, marking the largest single-month inflow since relevant statistics have been kept since 2005. Strategists, including Ikue Saito, noted in a report that the current foreign exchange hedge ratio for foreign investors buying Japanese stocks is estimated to be around 14%, still low compared to the nearly 50% level during the "Abenomics" era. They added that the annualized pace of foreign capital inflows into the Japanese stock market this year is 8.7 trillion yen, a rate equivalent to the early days of "Abenomics" when foreign capital was buying Japanese stocks at an annual rate of about 9 trillion yen. Despite the strong performance of the Japanese stock market, individual investors continue to be net sellers of domestic stocks. Policymakers are currently discussing adjusting the "Individual Savings Account" system to encourage people to hold domestic stocks, but this adjustment is unlikely to happen in the short term. Strategists suggest that if this system is eventually adjusted, it will help alleviate the pressure from yen selling caused by Japanese individual investors purchasing foreign stocks through NISA accounts.