Foreign investors made their biggest weekly sell-off in Japanese shares in the week ended June 27, with technology stocks rising, Reuters reported. Sentiment on the Street was further dampened by concerns about stretched AI valuations and debt-fueled spending on artificial intelligence.

Foreign investors dumped a net 1.82 trillion yen ($11.2 billion) from Japanese stocks last week, the biggest weekly outflow since March 28, Japan’s Finance Ministry data showed on Thursday.

Japanese long-term bonds saw foreign inflows for the fourth straight week, totaling 493.7 billion yen. Foreign investors also sold 2.43 trillion yen in short-term bills, Reuters reported.

As foreign investors pulled out of Japanese markets, domestic retail investors moved to stem the sell-off by buying a record number of stocks during the week, Bloomberg reported.

According to data from Japan Exchange Group Inc, domestic Japanese retail investors bought a net ¥950 billion ($5.9 billion) in equities, with tech selloffs sending equity gauges down, Bloomberg reported.

The tech-heavy Nikkei 225 gauge fell 2.7% during the period.

Despite last week’s slowdown, the benchmark Nikkei 225 posted its strongest quarterly gain on record, driven by a global rally in AI-linked technology stocks. But enthusiasm around the sector has begun to wane as investors question the sustainability of high valuations and heavy AI spending, leaving the market vulnerable to volatility and sharp selloffs.

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