EWJ Stock Recent News

Japan ETFs have been surging over the past year on several factors and beating the S&P 500.

Vasu Menon, managing director of investment strategy at OCBC Bank, shares his views on Japanese stocks, the economy and central bank policy. The economy unexpectedly slipped into recession after shrinking for a second quarter due to anemic domestic demand, prompting some central bank watchers to push back bets on when the nation's negative interest rate policy will end.

World stocks that hold US shares are up 1.6% year to date while foreign equities ex-US are down 1.5% in 2024. The Japanese stock market was a strong competitor vis-à-vis US shares last year too.

The Nikkei 225 on Monday rallied to yet another 33-year high, advancing amid the Tokyo Stock Exchange publishing a list of companies that have taken actions to bolster their share price.

TOKYO — Asian stocks slipped on Thursday, tracking a weak start to 2024 on Wall Street as Japan's markets reopened.

Japan has been in a long period of economic stagnation and muted stock market returns. The government in Japan is taking steps to reverse this by potentially changing its yield curve control policy as well as improving share ownership liquidity. These macro headwinds with a relatively low valuation level make EWJ a compelling long going into 2024.

Japanese securities have been gaining momentum lately driven by increased foreign inflow helped by improved corporate earnings and reforms in corporate governance. Along with the optimistic outlook by Berkshire Hathaway on the country, look at ETFs with exposure to Japan.

The EWJ provides value-weighted exposure to the Japanese markets, but there are alternatives with lower expense ratios. The ETF has a high expense ratio of 0.5%, while the FLJP has a much lower expense ratio of 0.09%. The decision to pivot or not by the Bank of Japan could have significant impacts on Japanese equities and global credit markets.

Things were looking tough for the BoJ as recently as this summer, when the country's core CPI bolted north of 4%, far beyond the 2% inflation target that major central banks view as ideal. The Bank of Japan is being reactive to an inflation threat that may very well be in the rearview mirror.

The debate over the future of Japan continues. Because of its small footprint, we often forget the oversized role Japan plays in the global economy.