Japan: Weekly ETF and CEF Performance [View article]
Michael, thanks leaving a comment.
VPL is included as a Japan ETF due to its majority exposure to Japan. Japan makes up 72.6% of the fund and 20 of its top 25 holdings are Japanese stocks as of 12/31/06 per Morningstar.
Prior to the WisdomTree and Russell/Nomura ETFs launched last year, VPL was one of the limited ways to get good exposure to Japan via ETF. It has a considerably smaller trading volume than iShares MSCI Japan Index ETF (EWJ), but has significant assets nonetheless.
Note EPP is ex-Japan and thus not included, but I do use it as part of my Asia region iShares weekly updates.
I haven't included other funds such as APF and RAP due to not having a majority composition from Japan.
With the weekly Japan updates I am not necessarily looking for broader coverage at this time, especially given the light trading volume of some of the funds you mention -- and even the existing ones 100% Japan!
In fact, from a regional viewpoint, I think the iShares Asia ETF weekly updates are most relevant given the % of specific market coverage and trading volume.
BoJ Rate Hike Was Expected, Same Day Effect Limited Given Global Situation (EWJ) [View article]
Enzio -- What type of concerns do you have with Japan?
I think the big concern to have right now is mostly politically oriented with Koizumi stepping down this September.
Oil prices are another concern and are certainly having an impact on prices and of course could go even higher.
I don't think a consumption tax hike is an issue at least not until 2008.
Lastly, I don't see much real threat from North Korea but I do think Japanese stocks could be held hostage so to speak by geopolitical events in the Middle East and elsewhere. So if other advanced economy stocks are struggling chances are Japanese stocks might follow suit.
Japanese Stocks Nose Dive, Japan ADRs & ETFs Next? (EWJ, ITF, VPL) [View article]
Let's review what happened yesterday to finish up the comparison. EWJ closed at $14.82 losing almost 1.1% on the day. The MSCI Japan Index ended at 1,014.468 in yen and 3,323.254 in USD. The difference between May 16 and March 16 for the yen denominated MSCI Japan Index is 0.42%. The dollar denominated difference is 6.84%. As expected the difference between the two N225 closing figures (May 16 and March 16) is almost exactly the same as the difference in the MSCI Japan Index yen denominated value. And the difference in EWJ between the two dates of 7.47% is almost within half a percent of the MSCI dollar denominated difference.
Let's see how the MSCI Japan Index changed between Monday the 15th and yesterday versus the change of -1.1% for EWJ. The yen denominated value lost 2.2% and the dollar denominated value lost 2.0%. That leaves a +0.9% difference between where the MSCI Japan Index closed and how EWJ ended trading. This is where the simultaneous trading of FOREX can have an intra-day impact as well as investor/trader sentiment and the Nikkei futures. The yen strengthened from an open of slightly over Y110/US$1 to close at around Y109.75/US$1. This would account for about 1/4 to 1/3 of the positive difference. Nikkei June 2006 futures contracts traded lower yesterday but not as low as the Nikkei's close, creating a difference of 0.5%. This amount added to the change in yen/USD FOREX puts us right around the +0.9% difference.
The Nikkei by the way went on to trade today (Wednesday) up 149.25 yen or 0.92%.
Japanese Stocks in the "House of Pain" (EWJ, ITF, VPL) [View article]
Mike please see this post (click here) I just published that hopefully explains everything and let's you see the light. The key is the exchange rate and the underlying index (MSCI Japan).
Not Too Late to Invest in Japan (EWJ) [View article]
First, you'll have to find out what JOF's holdings are. You may have access to its most recent holdings if you are a shareholder from its website or you can try Morningstar.com. From Morningstar.com I found JOF's portfolio as of 11/30/05, at which time Sanyo Special Steel was its largest holding. In order to find details of this particular stock you can use Bloomberg.com. Click "Find Symbol" on the upper-right of the page and choose JP as the "Source" and type in the company name. Bloomberg data will provide you with a P/E and other financials (click here).
The information is out there but it may not always be easy to access. Closed-end funds may lack transparency in terms of their holdings. And those involved in smaller-cap stocks will seemingly have higher turnover. I am down on Japanese small caps at current valuations and at the current stage of the Japanese economy's recovery. Small caps have had a nice run but I tend to like mid and larger caps going forward.
What Do Japan Stocks and the Pittsburgh Steelers Have in Common? (EWJ, ITF, VPL) [View article]
Upside, downside, everything is supposedly already priced in; at least until the next trading session starts and new information or reasons to seek economic gain appear. There's no sense arguing about peak market levels and the gaps that exists between current levels. These comparisons are simply used to show the degree of rise and fall and vice versa. Nobody expects the N225 to hit 38,000 overnight. You sound pretty much like one of the naysayers Christy was referring to. There's nothing wrong with that. I tend to take an optimistic stance based on the improving economic fundamentals and overall sentiment and what I believe to be is a sustainable economic recovery.
Greenspan Comments on Japan's Economy (EWJ, ITF, VPL) [View article]
Thanks for your analysis Enzio -- I appreciate your insightful comments. I had never thought of Japan in terms of it "exporting its imports" but you are right in that in order to export Japan must import raw materials first. Excellent point that if the yen appreciates Japan's import costs fall but at the same time its exports become less price competitive. Most readers should recognize the latter but of equal importance for Japan is the rate at which the Chinese RMB appreciates.
I won't argue against your main point that "many of us over-emphasize the role of FOREX rates and economic growth." However, for individual companies and especially for large scale exporters such as the companies I referenced that derive a large majority of their sales and profits overseas, FOREX is in fact a huge issue.
Buy Japanese Stocks! Reaction to Livedoor-Induced Nikkei Sell-Off (EWJ, ITF, VPL, JEQ, JOF) [View article]
You are right, it's not all about livedoor. However, in the long run we might thank livedoor for inciting the 6.8% correction that took place the first three trading days this week. Obviously there are a number of other factors at work as you mentioned. Ultimately though the livedoor debacle might hurt the Japanese economy and stock market if the "establishment" is able to maintain its influence and old fashioned ways. Horiemon whether you like the guy or not, has been successful at shaking up the system despite his failed attempts in areas such as buying a pro baseball team, the NBS takeover, and his political bid.
Buy Japanese Stocks! Reaction to Livedoor-Induced Nikkei Sell-Off (EWJ, ITF, VPL, JEQ, JOF) [View article]
Scott,
Thanks for your comments. I agree, things have not been going well for the TSE. You might be interested in reading this extract from a post I just completed: "Livedoor shock
Sayonara to Deflation in '06 (EWJ, ITF, VPL) [View article]
For those interested also see Takehiro Sato of <strong>Morgan Stanley Japan</strong> who penned an essay, "The Dawn of a New Golden Age." He states, "There potentially will be three surprises for the Japanese economy in 2006. ... These surprises all support further euphoria in asset markets under near-zero or negative real interest rate conditions, in our view. Conditions also fundamentally differ from the bubble period, as valuations are in line with profit growth. We thus refer to the upbeat sentiment as euphoria, and not a bubble." Click the hyperlink on the essay title to read about the three surprises, but be ready for an economics lesson. I find "euphoria" to be an interesting word to use to describe the upbeat sentiment. I am still chewing on this.
"A Contrarian View of Japanese Stocks: Now Is a Good Time to Buy Them" (EWJ, ITF, VPL) [View article]
I agree matthew25. And thank you for sharing the informative link. It looks like '06 will see even further American investor interest in Japan as indices are re-weighted. Also if the Nikkei 225 and TOPIX can hold their gains into the New Year, which I believe will happen, then it is an indication that in fact this recovery is for real. In my opinion the next big test comes April 1st by which time I expect the BoJ to end its easy monetary policy. Although that's only about 3.5 months away, a lot can happen in the meanwhile. Fundamentally, I believe the Japanese economy is poised to move ahead, waving good bye to deflation and welcoming inflation. Only then we can get ready for a stronger yen vs. US$.
A Yen For Japanese Stocks (ETFs: EWJ, VPL, EFA) [View article]
Nice write-up and summary of the various articles on Japan investing.
I find it interesting that Japanese financial institutions are marketing foreign investments to domestic clients so aggressively, but don't blame them for doing so in order to bring in some new revenue. Although there is increasing retail interest in high-dividend yielding domestic stocks and funds the most popular investments seem to remain abroad, which has already been pointed out and is putting further downward pressure on the yen.
Imagine if instead of being net-sellers of Tokyo Stock Exchange traded shares, if the Japanese were more often net-buyers, then the sky is the limit, i.e. a 20,000 Nikkei 225.
For the U.S. investor there is a lot of potential upside with a strengthening yen post April '06 if the BoJ ends its easy monetary policy and with the re-weighting of not only individual portfolios but also the indices.
Japan: Weekly ETF and CEF Performance [View article]
VPL is included as a Japan ETF due to its majority exposure to Japan. Japan makes up 72.6% of the fund and 20 of its top 25 holdings are Japanese stocks as of 12/31/06 per Morningstar.
Prior to the WisdomTree and Russell/Nomura ETFs launched last year, VPL was one of the limited ways to get good exposure to Japan via ETF. It has a considerably smaller trading volume than iShares MSCI Japan Index ETF (EWJ), but has significant assets nonetheless.
Note EPP is ex-Japan and thus not included, but I do use it as part of my Asia region iShares weekly updates.
I haven't included other funds such as APF and RAP due to not having a majority composition from Japan.
With the weekly Japan updates I am not necessarily looking for broader coverage at this time, especially given the light trading volume of some of the funds you mention -- and even the existing ones 100% Japan!
In fact, from a regional viewpoint, I think the iShares Asia ETF weekly updates are most relevant given the % of specific market coverage and trading volume.
BoJ Rate Hike Was Expected, Same Day Effect Limited Given Global Situation (EWJ) [View article]
I think the big concern to have right now is mostly politically oriented with Koizumi stepping down this September.
Oil prices are another concern and are certainly having an impact on prices and of course could go even higher.
I don't think a consumption tax hike is an issue at least not until 2008.
Lastly, I don't see much real threat from North Korea but I do think Japanese stocks could be held hostage so to speak by geopolitical events in the Middle East and elsewhere. So if other advanced economy stocks are struggling chances are Japanese stocks might follow suit.
Japanese Stocks Nose Dive, Japan ADRs & ETFs Next? (EWJ, ITF, VPL) [View article]
Let's see how the MSCI Japan Index changed between Monday the 15th and yesterday versus the change of -1.1% for EWJ. The yen denominated value lost 2.2% and the dollar denominated value lost 2.0%. That leaves a +0.9% difference between where the MSCI Japan Index closed and how EWJ ended trading. This is where the simultaneous trading of FOREX can have an intra-day impact as well as investor/trader sentiment and the Nikkei futures. The yen strengthened from an open of slightly over Y110/US$1 to close at around Y109.75/US$1. This would account for about 1/4 to 1/3 of the positive difference. Nikkei June 2006 futures contracts traded lower yesterday but not as low as the Nikkei's close, creating a difference of 0.5%. This amount added to the change in yen/USD FOREX puts us right around the +0.9% difference.
The Nikkei by the way went on to trade today (Wednesday) up 149.25 yen or 0.92%.
Japanese Stocks in the "House of Pain" (EWJ, ITF, VPL) [View article]
Not Too Late to Invest in Japan (EWJ) [View article]
The information is out there but it may not always be easy to access. Closed-end funds may lack transparency in terms of their holdings. And those involved in smaller-cap stocks will seemingly have higher turnover. I am down on Japanese small caps at current valuations and at the current stage of the Japanese economy's recovery. Small caps have had a nice run but I tend to like mid and larger caps going forward.
What Do Japan Stocks and the Pittsburgh Steelers Have in Common? (EWJ, ITF, VPL) [View article]
Greenspan Comments on Japan's Economy (EWJ, ITF, VPL) [View article]
I won't argue against your main point that "many of us over-emphasize the role of FOREX rates and economic growth." However, for individual companies and especially for large scale exporters such as the companies I referenced that derive a large majority of their sales and profits overseas, FOREX is in fact a huge issue.
Buy Japanese Stocks! Reaction to Livedoor-Induced Nikkei Sell-Off (EWJ, ITF, VPL, JEQ, JOF) [View article]
Buy Japanese Stocks! Reaction to Livedoor-Induced Nikkei Sell-Off (EWJ, ITF, VPL, JEQ, JOF) [View article]
Thanks for your comments. I agree, things have not been going well for the TSE. You might be interested in reading this extract from a post I just completed: "Livedoor shock
Sayonara to Deflation in '06 (EWJ, ITF, VPL) [View article]
"A Contrarian View of Japanese Stocks: Now Is a Good Time to Buy Them" (EWJ, ITF, VPL) [View article]
A Yen For Japanese Stocks (ETFs: EWJ, VPL, EFA) [View article]
I find it interesting that Japanese financial institutions are marketing foreign investments to domestic clients so aggressively, but don't blame them for doing so in order to bring in some new revenue. Although there is increasing retail interest in high-dividend yielding domestic stocks and funds the most popular investments seem to remain abroad, which has already been pointed out and is putting further downward pressure on the yen.
Imagine if instead of being net-sellers of Tokyo Stock Exchange traded shares, if the Japanese were more often net-buyers, then the sky is the limit, i.e. a 20,000 Nikkei 225.
For the U.S. investor there is a lot of potential upside with a strengthening yen post April '06 if the BoJ ends its easy monetary policy and with the re-weighting of not only individual portfolios but also the indices.