Industry-wise performance of EWJ
Earlier in this series, we discussed why the iShares MSCI Japan ETF (EWJ) closed lower on November 25, 2015. But to understand what dragged down these results, it’s important for investors to analyze the performance of the various industries in EWJ on November 25.
As we can in the above graph, the banking sector yielded the highest negative weighted return of 0.16%. It also yielded an individual return of -33.5%. The reason behind this performance was that the Japanese leading banking companies, such as Mitsubishi UFJ Financial (MTU), Sumitomo Mitsui (SMFG), and Mizuho (MFG), declared that they would realize investment gains by selling the stock holdings on their latest earnings. They may sell government bonds to limit the interest rate risks. These companies are expecting that overseas and domestic lending will face a slowdown in 2016 because of a slowdown in emerging markets, low commodity prices, and sluggish corporate spending.
Auto manufacturing industry
The auto manufacturing industry yielded a weighted return of -0.07% and an individual return of -8%. Auto manufacturing stocks Toyota Motor (TM) and Honda Motor (HMC) yielded -0.47% and -1%, respectively, on November 25. After the statement provided by Japan’s largest banks, the sentiment was negative, and the auto manufacturing industry fell.
For more, you may be interested to read Geopolitical Turmoil Affects European and Japanese ETFs.