JPM Japan Flows

J P M O R G A N Global Markets Strategy 12 August 2026

Japan Flows & FX Positions No conclusive evidence of allocation shift by GPIF

• The July monthly data is insufficient to conclude that a portfolio allocation shift Japan Markets Research has occurred within GPIF. Ikue Saito AC ( • Japanese retail investors took profit from their short USD/JPY, now turned long both USD/JPY and cross JPY. JPMorgan Chase Bank, N.A., Singapore Branch • Retail investors recorded net purchases of ¥1.2tn in foreign equities, the largest Junya Tanase since April. However, gross transaction volumes declined sharply in July, ( reflecting reduced activity following the equity market correction, particularly JPMorgan Securities Japan Co., Ltd. in AI-related names. • Equity inflows by foreign investors rebounded, marking a YTD pace above that of previous years, while outflows from Japanese bonds were observed for 2 months in a row as JGB yields continued to climb higher.

Japanese Institutional Flows: No conclusive evidence of allocation shift by GPIF

• Japanese pension funds recorded net purchases of ¥0.9tn in foreign bonds (JPM estimate: +¥2.1tn) and net sales of ¥1.0tn in foreign equities (JPM estimate: +¥0.2tn). Foreign bond purchases came in below expectations, while foreign equity sales exceeded estimates. That said, both deviations remain within the mean average error of ±¥1.3tn relative to JPM estimates since March 2020. As such, the July monthly data is insufficient to conclude that a portfolio allocation shift has occurred within GPIF. • Japanese investors net bought EUR denominated bonds, while net selling USD and AUD denominated bonds (Figure 2). m w C v g o d k b y n itlrfsecau

Figure 1: Pension funds continued to buy foreign bonds in July Figure 2: Currency breakdown of foreign bond investment flows ¥ in trillions; net purchases of foreign bonds by Japanese residents, classified by ¥ in trillions; net purchases of foreign bonds by Japanese investors, classified by investor type currency denomination Others Retail Non-Life Insurance -4.0 -5.0 Others JPY HKD CNH CHF SEK Lifers Brokers Pension -6.0 DKK GBP EUR AUD CAD USD -6.0 Apr May June July Aug Sep Oct Nov Dec Jan Feb Mar Apr May June July 2026

Source: Bank of Japan, Ministry of Finance, J.P. Morgan. Source: Bank of Japan, Ministry of Finance, J.P. Morgan.

Mrs. Watanabe’s FX margin trade positions: Taking profit from intervention trade

See page 5 for analyst certification and important disclosures.

Ikue Saito AC Global Markets Strategy ( August 2026 JPMORGAN

Figure 3: Mrs. Watanabe took profit from intervention trade and now turned short JPY Four-week average of FX margin trading positions, ¥ in trillions, cross JPY sum includes AUD/JPY, EUR/JPY and GBP/JPY

USDJPY (4w ma, LHS) CrossJPY sum(4w ma, RHS)

Figure 4: Retail investors took profit from their intervention trade and now turned long USD/JPY

USD/JPY long USD/JPY short USD/JPY Net -3,000

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Japanese Retail Flows: Strongest net purchases since April despite volume slump

• Retail investors recorded net purchases of ¥1.2tn in foreign equities, the largest since April. However, gross transaction volumes declined sharply in July, reflecting reduced activity following the equity market correction, particularly in AI-related names (Figure 6). m itlrfJsaepnvodquyghkw