Foreign investors dumped Japanese stocks at an 18-month high last week, reflecting mounting anxiety about potential economic fallout from the Iran conflict. The selling spree marked the most significant outflow since September 2024, as global reassessment of Asian assets accelerated amid escalating Middle East tensions.

The exodus of foreign capital put downward pressure on Japanese equity markets, with major indices experiencing notable declines. Investors appeared particularly concerned about supply chain disruptions and energy price volatility that could ripple through Japan's export-dependent economy if the Iran conflict intensifies or spreads throughout the region.

This selling pattern suggests international investors are increasingly viewing Japanese assets through a geopolitical risk lens. The accelerated outflows highlight how quickly market sentiment can shift when regional stability appears threatened, creating challenges for Japanese policymakers seeking to maintain economic stability amid external pressures.