What are MM’s thoughts on Japan?
James, What are your thoughts on Japan? I see that EWJ (Japanese index fund) is making a run after a massive fall. Japan is just too big an economy to ignore.
The Latest Q&A
Answer
Hi,
The iShares MSCI Japan ETF (EWJ US) has managed to bounce 7% over the last 3-weeks but its hardly a dent in the last 10-months decline. The Nikkei-225 has fared better then the EWJ simply because the ETF is unhedged hence the weakness in the Japanese Yen has significantly hindered its performance i.e. if MM was to look for exposure to Japanese equities even following the major move in the USDJPY it would be with a hedged vehicle such as the BetaShares ASX traded HJPN ETF.
The Japanese economy has been very slow to re-open from Covid, Australians can still only visit the country on a holiday with a tour group, I have a few friends who are hoping to to go skiing around Christmas and its proving tough to make firm plans, however this is likely to improve into 2023 which should help the economy and share market improve through 2023.
Importantly the Japanese economy isn’t suffering from high inflation and its new Prime Minister has implemented a record spending package boosting the potential growth rate of their economy even while some companies are experiencing cost plus inflation. Assuming the countries major companies can improve productivity we like the outlook for Japan especially when consumer sentiment starts to improve courtesy of the countries spending.
