Confidence is on the down side among big Japanese manufacturers, setting a mellow mood, and low morale for related ETFs.
The recent fall was less than expected, and capital spending plans were weaker than anticipated, yet not quite as bad as economists had thought during the initial wake of the credit crisis. Overall, the Japanese economy is slow, but not as slow as had been feared.
Japanese government bonds advanced, pushing the 10-year yield down over concern of a slowing economy. A downgraded outlook and revision for the assessment for the fiscal year may materialize. Theresa Barraclough for Bloomberg reports that the yield on a 1.8% bond due June 2018 fell 0.002% to 1.655%.
While Japan has slowed some, it's still faring better than some of its Asian counterparts.
While the Nikkei 225 Stock Average has been on its longest losing streak in 54 years, it's still the top performer in Asia's largest equity markets, report Masaki Kondo and Makiko Kitamura for Bloomberg. But Japanese stocks have avoided the region's biggest losses, and the country's inflation rate is less than one-fifth that of China's and India's.
The iShares MSCI Pacific ex-Japan (EPP) is down 11.4% over the last three months and 15.3% year-to-date, while the iShares MSCI Japan Index (EWJ) is down 9.7% in the last three months and 7.4% year-to-date.
Other ETFs giving exposure to the country include:
- BLDRs Asia 50 ADR Index (ADRA), down 12.3% year-to-date
- iShares S&P Asia 50 Index (AIA), down 14.7% year-to-date
- PowerShares FTSE RAFI Japan Portfolio (PJO), down 11.2% year-to-date
- WisodmTree Japan Total Dividend Fund (DXJ), down 4.1% year-to-date
China's ETFs No Fairytale as Three Bears Storm the Markets
As of Wednesday's market close, we entered a bear market that could weigh on stocks and ETFs for the time being. But here's a riddle: if a bear market is typically defined as a market that has fallen 20% off its recent high, what's it called in China, which is down 60%?
Scott Tong for Marketplace says Shanghai is down "three bears" by that math. The problems vexing China are similar to those in the rest of the world: energy prices, automakers and so on.
China is still predicted to grow 8% to 9% this year, and Tong points out that the stock market isn't always so reflective of the broader economy because it's relatively small and heavy in retail investors. That makes the market there more subject to the feelings of the people.
China ETFs have taken a big hit so far this year, after a solid 2007:
- iShares FTSE/Xinhua China 25 (FXI), down 25.4% year-to-date
- NETS Hang Seng China Enterprises Index Fund (SNO), launched on May 22
- Claymore/AlphaShares China Small Cap Index (HAO), down 20.4% since Jan. 30 inception
Australia and ETF Could Ride High On Natural Resource Boom, Wiping Out Trade Deficit This Year
Australia and the related ETFs can enjoy the latest news that the country's trade deficit narrowed to the smallest gap in 15 months in May, as coal shipments boosted exports.
Jacob Greber for Bloomberg reports the shortfall narrowed to $866 million from $921 million in April, according to a median estimate among 24 economists at Bloomberg News.
Record prices for natural resources such as iron ore and coal supports the central bank's view that the economy will be boosted by 20% from a surge in overseas demand. Also supported by this news could be the iShares MSCI Australia Index (EWA) along with NETS Trust (AUS).
EWA is down 11.8% year-to-date, while AUS is down 5.2% since its April 10 inception.
As bulk commodity prices see massive increases the Australian trade deficit could turn into a surplus later this year.
This article has 4 comments:
The bubble has burst in China... Europe, Asia and USA are all heading to a slowdown that popped the bubble. I expect the people are beginning to feel like Japan in 1990 when their market began declining from a high of 40,000 and went down to 10,000 over very long period before finally going back to 20,000 and now back to 13,000. The China markets are down 60% so far, but have not seen anything yet.
Can you imagine all the bad luck that China has faced this year?
Worst Blizzard in 50 years
Worst Earthquake in 54 years
Worst flooding in ___ years
Highest Fuel prices ever, Plane fares ^^^ higher
The earthquake has affected the preparations for the Olympics, reducing profit potential.
Olympics will be a huge disaster, very hot and muggy. Taxis will be tangled in huge traffic jams, tourist will hate it.
Just learned that there is a problem of Algae in waterways planned for Olympic boating events. 10,000 workers are now clearing the river.
Also learned they are expecting locust, 35,000 workers from Outer Mongolia have been hired to try to do something about the problem. How do you fix this?
I wonder if the Chinese are beginning to feel like ancient Egypt when Moses asked the Pharaoh to "Let my People Go." The Nile filled with blood, fish died and began to stink and they had to dig wells as the water was too bad to drink, then came frogs, gnats, flies, livestock died, they all got boils, hail storms, locust, total darkness for 3 days and then death of firstborn?
I WISH THIS KIND OF BAD LUCK WOULD GO ON OPEC's HEADS DUE TO THEIR CONSPIRACY TO DESTROY THE WESTERN WORLD'S ECONOMIES. I REALLY BELIEVE THAT IS THEIR GOAL.
ARABS/MUSLIMS COULD NOT DEFEAT US WITH 9/11 OR MILITARILY, BUT THEY CAN BREAK OUR ECONOMIES AND BANKRUPT THE USA. SOUND IMPOSSIBLE? THINK ABOUT WHAT WILL HAPPEN WHEN WE RAISE TAXES TO PAY FOR GLOBAL WARMING AND TO TAKE ALL THE WEALTH FROM THE RICH WHEN WE ELECT OBAMA PRESIDENT. WOW, THAT SCARES ME REALLY BAD. WE COULD NOT MAKE IT ANY EASIER FOR OPEC THAN TO ELECT HUSANE OBAMA PRESIDENT. WHAT TO DO?