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Moving Average Analysis of EWJ’s Banking Industry

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Oct. 11 2020, Updated 12:33 p.m. ET

Banking industry

On December 31, 2015, the banking industry of the iShares MSCI Japan ETF (EWJ) returned -0.4%. The Wisdom Tree Japan Hedged Equity ETF (DXJ) fell by 1% on the same day. Banking stocks like Sumitomo Mitsui Financial Group (SMFG), Mizuho Financial Group (MFG), Mitsubishi UFJ Financial Group (MTU), and Aozora Bank returned 0.06%, -12%, -34%, and -0.93%, respectively, on that day.

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Moving averages

The YTD (year-to-date) returns of banking stocks like Sumitomo Mitsui Financial Group, Mizuho Financial Group, Mitsubishi UFJ Financial Group, and Aozora Bank are 7%, 19%, 14%, and 11%, respectively. Most of the banking stocks had a positive performance in 2015. In 2016, most of Japan’s leading banks expect lending to slow down because of a slowdown in domestic demand and emerging market demand. This could hamper their profit margin. To hedge this position, banking companies wants to realize their investment gains by selling their stock holdings.

  • Sumitomo Mitsui Financial Group is trading 5% and 4% below its 100-day and 50-day moving averages, respectively. It’s trading at par with its 20-day moving average. The 100-day moving average is a strong resistance point for the stock. The stock crossed the 100-day moving average four months before. It traded below the 100-day moving average since October.
  • Mizuho Financial Group is trading 1% and 2% below its 100-day and 50-day moving averages, respectively. It’s trading at par with its 20-day moving average.
  • Mitsubishi UFJ Financial Group is trading 4% below its 100-day and 50-day moving averages. It’s trading 2% below its 20-day moving average.
  • Aozora Bank is trading 3% and 2% below its 100-day and 50-day moving averages, respectively. It’s trading at par with its 20-day moving average.

Analysts’ estimates

Analysts’ estimates indicate upsides of 13%, 20%, 11%, and 18% for Sumitomo Mitsui Financial Group, Mizuho Financial Group, Mitsubishi UFJ Financial Group, and Aozora Bank over the next 12-month period from its current levels as of December 31, 2015.

In the next part of this series, we’ll analyze the performance of EWJ’s bottom stocks on December 31, 2015.

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