The EWJ ETF Fell Ahead of Bank of Japan Meeting

The iShares MSCI Japan ETF (EWJ) is an indicator of the Japanese equity market. It closed at $12.4 on October 27, a fall of 0.80% from the previous trading session, ahead of the Bank of Japan (BoJ) monetary policy review meeting scheduled on October 30. Please refer to the graph below for the top five and bottom three industry-wise performances.

Market participants largely expect that there will be a signal of further easing from the Bank of Japan, following the footsteps of the ECB (European Central Bank). The latter has already signaled further easing for the Eurozone in December in its monetary policy review on October 22. As most parts of the world are facing deflationary situations, central banks appear to be cautiously taking some action to stimulate the economy. With the Japanese markets waiting for the big event in this week, we could expect more stock market volatility in the current week.

The iShares MSCI Japan ETF invests in large capitalization stocks such as Toyota Motor (TM), Mitsubishi UFJ Financial Group (MTU), Sumitomo Mitsui Financial Group (SMFG), Honda Motor (HMC), and SoftBank Group (SFTBY). The ETF fell 0.80% on the October 27 trading session. The top three performing industries were food, REIT, and Pharmaceuticals. The bottom three industries were banking, electronics, and distribution. Among all the sectors, the financial sector stood to be affected the most by the Bank of Japan’s statement.

Out of the 316 constituents of the fund, 67 stocks gave positive returns on October 27. The top three performing stocks for the day were Japan Airport Terminal Co Ltd, JSR Corporation (JSCPY)(JSCPY), and ONO Pharmaceuticals:

• Japan Airport Terminal’s stock was up 6.1%, possibly due to the enthusiasm surrounding the upcoming New Chitose Airport International Animation Festival, to be held on October 31–November 3.
• JSR Corporation (JSCPY)(JSCPY) is one of the major players in the Polyisoprene Elastomers market. It’s expected to grow at a faster rate compared to the last quarter due to growth in its end-user industries. The stock was up 4.1% on October 27.
• ONO Pharmaceuticals gained 3.9% on October 27, as it upgraded its estimated net profit for the April-September period by 92%. This was led by the firm’s performance, driven by a cancer drug.

In the next part of the article, we’ll analyze the fund from a statistical point of view.