Japanese equities are poised to resume their upward trajectory as institutional investors, including pension funds, appear to be concluding their portfolio reduction and recommencing rebalancing activities following a post-election market rebound.

The wave of direct selling from so-called "real money funds" has moderated. On Tuesday, the proportion of such transactions among Topix index constituents fell to 60%, marking the lowest level since last month. This data, which reflects orders not placed for short-selling purposes, often serves as a significant market signal.

When the Topix index hit a fresh record high in mid-January, the share of real money fund orders remained above 60% for nine consecutive trading days. This was followed by the emergence of short-selling pressure, after which the market found a bottom. In the current cycle, this ratio has now stayed above 60% for eleven consecutive trading days.