EWJ Stock Recent News

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.

It is disappointing that labour cash earnings were weaker than expected in Japan, but consumption held up relatively well. Meanwhile, due to the recent spike in market rates and high inflation, the Bank of Japan is expected to change its YCC policy and forward guidance at its October meeting.

There is growing sentiment that Japan may have turned a corner and could experience robust growth in a changing landscape. Japan's biggest appeal is its cheap valuation. Japan still faces many issues on demographics and monetary policy.