Korean Investors Flock to Japan Amid Weak Yen and AI Boom

Korean investors are turning to Japan as they seek more attractive opportunities in the weak yen environment and AI boom. In the first nine months of this year, South Korean retail investors bought $4.65 billion worth of Japanese stocks, a 94% increase from last year's $2.40 billion. The MSCI Japan Index traded at 16.38 times expected earnings as of August 31.

Japan's semiconductor supply chain gives investors exposure to the same data-center spending that has lifted earnings expectations for US, Korean, and Taiwanese chipmakers. Companies like Kioxia and Advantest have already made substantial gains this year, with memory-chip maker Kioxia surging 456% as of September 11.

Yuji Hosaka, a professor at Korea University's Graduate School of Public Administration, said Japan presents an unusual combination of higher rates and resilient equities. 'The conventional pattern is not playing out in the same way in Japan,' he said. 'Rates are moving up gradually, but the yen remains weak.'