Japan’s Nikkei has been hit hard this week in line with other Asian indices. The volatility has been amplified by Japan importing 90-95% of its oil, most of Japan’s crude shipments passing through the Strait of Hormuz, making the country highly sensitive to the current Iranian conflict. In hindsight, the recent market euphoria created by Sanae Takaichi’s emphatic victory looks to have created a pivot high in the Nikkei.
The ASX-listed HJPN is currency hedged as its name implies, and gives local investors exposure to ~140 stocks for 0.56% pa. This is an excellent vehicle to gain exposure to the Japanese market, where buying/selling shares can be a harder/more expensive exercise. Similar to the EWY ETF, we like the HJPN ETF into current weakness, but would be more patient before pressing the “accumulate” button, preferring the chip/memory exposure delivered by the Korean facing ETF.
- We are anticipating further volatility by the HJPN, but we like the risk/reward at 8-10% lower.
