4 Aug

Will Japan’s Strong Performance Continue?

WRITTEN BY Heidi Richardson

After Japan’s strong performance this year, some believe the market will soon run out of steam. Heidi Richardson disagrees.

In late June, Japan’s benchmark Nikkei 225 index closed at its highest level since March 2000. While Japanese stocks are down a bit from then, the Japanese market, as measured by the MSCI Japan index, is still up roughly 15 percent this year, outperforming the broader MSCI ACWI index global market, according to mid-July Bloomberg data.

Japan’s strong performance has prompted some market watchers to question whether there’s still a case for adding exposure to the Land of the Rising Sun. They’re worried that the market will soon lose steam, as one of the major recent buyers of Japanese stocks—the Government Pension Investment Fund (or GPIF)—is set to hit its target equity allocation as soon as this month.

[{"interval":86400,"data":[11.382,11.243,11.243,11.183,11.183,11.183,11.203,11.074,10.895,11.054,11.188,11.188,11.188,11.074,11.034,11.124,11.104,11.183,11.183,11.183,11.183,11.283,11.373,11.392,11.442,11.442,11.442,11.402,11.532,11.552,11.532,11.631,11.631,11.631,11.432,11.552,11.532,11.591,11.691,11.691,11.691,11.591,11.482,11.631,11.651,11.731,11.731,11.731,11.731,11.87,11.86,12.069,12.159,12.159,12.159,12.268,12.198,12.258,12.228,12.338,12.338,12.338,12.288,12.318,12.258,12.198,12.268,12.268,12.268,12.248,12.208,12.029,12.139,12.407,12.407,12.407,12.417,12.467,12.497,12.691,12.547,12.547,12.547,12.746,12.805,12.775,12.746,12.616,12.616,12.616,12.666,12.716,12.467,12.517,12.517,12.517,12.517,12.626,12.775,12.835,12.855,12.855,12.855,12.855,12.875,12.785,12.87,12.935,12.964,12.964,12.964,12.86,12.905,13.104,13.203,13.193,13.193,13.193,13.243,13.213,13.253,13.134,12.795,12.795,12.795,12.955,13.014,12.765,12.756,12.775,12.775,12.775,13.074,12.865,12.86,12.945,13.009,13.009,13.009,13.074,13.183,13.193,13.193,13.238,13.238,13.238,13.238,13.213,13.044,13.134,13.104,13.104,13.104,12.984,13.044,13.014,13.064,12.974,12.974,12.974,12.895,12.825,12.696,12.905,12.964,12.964,12.964,12.895,12.935,12.875,12.765,12.775,12.775,12.775,12.785,12.984,13.134,12.999,13.02,13.02,13.02,13.08,12.75,12.81,12.9,12.9,12.9,12.9,12.9,12.81,12.84,12.31,12.46,12.46,12.46,12.66,12.83,12.91,12.9,12.95,12.95,12.95,12.98,12.98,12.94,12.88,12.87,12.87,12.87,12.75,12.7,12.76],"units":"$","start":1419915600,"end":1438232400,"name":"iShares MSCI Japan ETF (EWJ)","metric":"Closing Price","source":"BATS Exchange","observation_start":null,"chart_type":"line"}]

Market Realist – Japan’s strong performance is likely to continue.

Japanese stocks (DXJ) have been among the best performers this year. The iShares MSCI Japan ETF (EWJ) has returned 14.0% YTD (year-to-date). Meanwhile, its currency-hedged sibling has risen by 17.6%. This is quite impressive, given that the S&P 500 (SPY) (IVV) has been flat for the year, while the iShares MSCI ACWI ETF (ACWI)—which tracks stocks from around the globe—has given returns of 2.4% YTD.

However, Japanese stocks are nowhere close to the levels seen in the late 1980s. The Nikkei 225 Index peaked at ~40,000 in 1989, but since then it has been a painful ride for the Japanese. The index is close to half of that level today, after two decades of deflation.

However, current Prime Minister Shinzo Abe has brought about monetary easing to depreciate the yen—a process well underway—and to fight deflation. Monetary easing is one of the three arrows of Abenomics.

Latest articles

German chip maker Infineon Technologies has reportedly raised 1.55 billion euros (~$1.74 billion) in capital by selling its shares to fund its acquisition of Cypress Semiconductor (CY). Infineon has sold ~113 million new shares at 13.70 euros each.

As of June 18, Dunkin’ Brands (DNKN) was trading at $80.07, an 8.9% rise since reporting its first-quarter earnings on May 2. Also, DNKN was trading at a premium of 29.8% from its 52-week low of $61.69 and a discount of 1.6% from its 52-week high of $81.40.

19 Jun

Are Lower Oil Prices Weighing on ExxonMobil Stock?

WRITTEN BY Maitali Ramkumar

ExxonMobil (XOM) stock has fallen 7.1% in the second quarter so far. Let's review ExxonMobil's stock performance in comparison to oil price changes and equity market movements in the quarter.

19 Jun

As Facebook Unveils Libra, MSFT and CRM Join a Blockchain Group

WRITTEN BY Mayur Sontakke, CFA, FRM

On June 18, Facebook (FB) launched Libra, its own cryptocurrency. On the same day, CoinDesk published another piece of blockchain news that didn’t receive as much fanfare as Facebook’s Libra news. Was the timing a coincidence? We think not.

Uber Technologies (UBER) has picked Melbourne as another test site for its flying taxi service known as UberAir. The Australian city is the first international test site Uber has chosen for its flying taxi service. The addition of Melbourne brings the number of test locations Uber has picked for its UberAir service to three.

Lyft (LYFT) and Uber Technologies (UBER) are pushing back against California legislation that would require them to recognize their drivers as employees rather than independent contractors. The legislation would require companies like Lyft to give their drivers the compensation and benefits spelled out under California’s employment regulations.

172.31.16.229