US investors are increasing their exposure to Japanese equities, particularly in technology and artificial intelligence, attracted by stronger returns compared with the US market, Bloomberg reported, citing Goldman Sachs Group Inc.

Bruce Kirk, Goldman’s chief Japan equity strategist, said US fund inflows into Japanese stocks are rising at the fastest pace since the Abenomics era. Active participation by US investors has reached its highest level since October 2022, reflecting renewed confidence in Japan’s market outlook.

Japanese equities have gained about 30 percent in dollar terms this year, supported by a 2.5 percent rise in the yen and stimulus measures under Prime Minister Sanae Takaichi. The performance has sharply outpaced the S&P 500’s 14 percent gain.

Kirk noted that growing US involvement could mark a shift from value to growth-oriented shares, as foreign investors increasingly target Japan’s tech and AI sectors. Global diversification trends and light foreign holdings compared with Abenomics levels leave room for additional inflows, he added.

Foreign investors purchased a net 384 billion yen (2.5 billion US dollars) of Japanese equities in cash and futures during the last two weeks of October, according to Japan Exchange Group data.