U.S. investors shift to Japan as Bridgewater exits China, fueling the 'Ninja Rally'

Investors are rotating capital into Japan, fueling a "Ninja Rally" that's outpacing Wall Street's performance. U.S. trade volatility, Bridgewater's exit from U.S.-listed Chinese stocks, and governance reforms have contributed to this eastward move. Japanese equities are up 16.3% YTD, while U.S.-listed ETFs like SPY and QQQ are at 9.02% and 10.39%, respectively.

Investors are rotating capital into Japan, fueling a "Ninja Rally" that's outpacing Wall Street's performance. U.S. trade volatility, Bridgewater's exit from U.S.-listed Chinese stocks, and governance reforms have contributed to this eastward move. Japanese equities are up 16.3% YTD, while U.S.-listed ETFs like SPY and QQQ are at 9.02% and 10.39%, respectively.

Warren Buffett's Berkshire Hathaway Inc. has expanded its investments in Japan, raising stakes in Mitsubishi Corp. and Mitsui & Co. [1]. The news from the trading houses sent shares across the sector higher on Aug. 28, 2025. Increased Holdings in Mitsubishi and Mitsui A Berkshire unit boosted its voting rights stake in Mitsubishi to 10.23%, up from 9.74% in March, according to a Mitsubishi statement. Mitsui separately confirmed that Buffett’s firm also lifted its holding, though it remained below 10%. As of March, Berkshire owned 9.82% of Mitsui shares, Bloomberg data revealed.

The U.S. court invalidating Trump-era tariffs has created a seismic shift in trade policy uncertainty for Japanese equities and Asian markets [2]. Japanese automakers gain short-term relief from reduced tariffs but face long-term vulnerability amid legal appeals. Semiconductor firms adapt to U.S. export controls through JPY 10 trillion subsidies and strategic U.S. partnerships.

Despite the recent surge, Japanese stocks remain attractively valued, particularly compared to U.S. stocks. Japan ETFs including First Trust Japan AlphaDEX Fund FJP, iShares MSCI Japan Value ETF EWJV, WisdomTree Japan SmallCap Dividend Fund DFJ, iShares MSCI Japan Small Cap ETF SCJ and Franklin FTSE Japan Hedged ETF FLJH have outperformed the SPDR S&P 500 ETF SPY over the past one month [1]. The ETFs like FJP, EWJV, DFJ, SCJ and FLJH have a P/E ratio of 16.29X, 14.37X, 15.27X, 19.4X, and 21.85X respectively against the S&P 500’s P/E of about 33.75X.

The recent $1.8 billion reallocation of South Korean retail capital from Tesla (TSLA) to crypto-linked equities like Bitmine Immersion Technologies (BMNR) reflects a strategic shift in investor priorities [3]. This movement, driven by regulatory clarity, market dynamics, and risk-return trade-offs, underscores a broader reevaluation of asset allocation in the post-pandemic era.

As the appeal process unfolds, investors should prioritize firms with diversified geographies, strong R&D pipelines, and alignment with U.S. strategic priorities—sectors poised to thrive regardless of the legal outcome.

References:
[1] https://finance.yahoo.com/news/buffett-boosts-stakes-japan-etfs-140000707.html
[2] https://www.ainvest.com/news/assessing-impact-court-tariff-ruling-japanese-equities-asian-markets-2509-21/
[3] https://www.ainvest.com/news/south-korean-investors-shift-1-8b-tesla-crypto-stocks-strategic-rotation-opportunity-2509/