Japan Leads a Broad Risk-On Surge

Japan ETFs pulled in $13.9B in net flows last week. That is the single biggest geographic move of the week. It dwarfs every other region on a 1-week basis and continues a much larger 3-month trend where Japan attracted $169.9B — second only to the U.S.

The contrast with China is stark. China saw $5.5B in net outflows this week. Flow imbalance dropped to 35.5, deep in selling territory. Over three months, China was actually a modest receiver of $17B in net inflows. That reversal is a clear trend break worth watching.

Geography Flows

The U.S. attracted $4.5B in net flows this week. That sounds solid, but against $356.7B over three months, the weekly pace is slowing. Emerging Markets drew $2.2B on a high flow imbalance of 83.5, signalling strong buying pressure. Global Ex-U.S. funds also saw $1.6B in with a striking 93.5 imbalance — almost entirely inflows over outflows. Hong Kong was the other notable loser, shedding $669M this week and $9.8B over three months. The selling there is persistent.

Sector Rotation

Tech took a heavy hit. Information Technology saw $4.4B in net outflows last week. The flow imbalance of 38.8 confirms sellers are firmly in control. That is a sharp reversal from the 3-month picture, where Tech led all sectors with $76B in net inflows. Money rotated out and into defensive and cyclical sectors. Industrials gained $953M this week. Health Care added $622M. Consumer Discretionary took in $718M. Energy also bled $503M last week, extending a 3-month losing streak of $7.3B. Financials were essentially flat at -$6M.

Asset Class and Strategy

Equities dominated both time frames. $25.4B flowed into equity ETFs this week. Over three months, the figure reached $812B. Fixed Income is also firmly in demand. $15.2B came in last week with a flow imbalance of 68.6. The 3-month tally stands at $245B. Commodities bucked that trend sharply. They pulled in $1.6B this week, but over three months they lost $30.6B — a significant divergence suggesting short-term positioning rather than a real shift.

Active strategies are the clearest winner in the style rotation. $5.9B flowed into active ETFs last week. Over three months, active strategies attracted $222.8B with a 76.3 flow imbalance. Passive Vanilla funds bled $5.7B this week despite strong 3-month inflows of $430.9B. Dividend strategies lost $1.4B this week after three months of solid $15.7B gains. Growth funds also reversed, losing $1B after drawing $11B over three months. Momentum strategies are deeply out of favour at -$568M this week versus +$5.4B over three months.

The overall tone is cautiously risk-on. Money is moving into equities and bonds simultaneously, favouring international markets like Japan and Emerging Markets while rotating out of Tech and China on a short-term basis.