Banking Stocks Dragged Down EWJ for the Second Straight Day



Industry-wise performance

Earlier in this series, we discussed why the iShares MSCI Japan ETF (EWJ) closed lower on November 27, 2015. We also looked at the moving averages of the top performers of EWJ. But to understand what drove the ETF and what pulled it down, it’s important for investors to analyze the performance of the various industries in EWJ on November 27.

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How miscellaneous manufacturers performed in EWJ

As we can see in the below graph, the miscellaneous manufacturer industry provided the highest weighted return of 0.01% as well as the highest individual return of 3.8% on November 27, 2015. Stocks for Toshiba (TOSBF), Nikon, and Fujifilm contributed individual returns of 2.3%, 0.89%, and 0.07%, respectively.

Things turned around for Toshiba

On Friday, November 27, 2015, Toshiba’s chief executive officer Masashi Muromachi said the company is considering selling a stake in its semiconductor business to raise capital in response to a protracted accounting scandal. The semiconductor business is the main moneymaker for Toshiba in recent days.

The accounting scandal happened in July 2015 due to inappropriate accounting practices. According to the investigation, it was found that the company’s chief executive officer Hisao Tanaka and two other executives were aware of it.

The banking industry, by contrast

As we can in the above graph, the banking sector yielded the highest negative weighted return of 0.07% on November 27. It also yielded an individual return of -18.2% for the second consecutive day. The reason behind this performance was that Japanese leading banking companies such as Mitsubishi UFJ Financial (MTU), Sumitomo Mitsui (SMFG), and Mizuho (MFG) declared that there’s an expectation of a slowdown in overseas and domestic lending in 2016 due to a slowdown in emerging economies, low commodity prices, and sluggish corporate spending. This news has been dragging the performances of banking stocks from November 26.

For more, you may be interested in reading Volkswagen Lifted Eurozone ETF while Banking Dragged down EWJ.


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