Industry Updates

Japan equity ETFs show signs of optimism

George Geddes

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ETFs offering exposure to the Japanese equity markets have rebounded following the Bank of Japan’s decision to double down its ETF buying last week.

In its efforts to calm spooked markets, Japan’s central bank plans to double its annual ETF spending from ¥6trn to ¥12trn.

Following the announcement from the Bank of Japan, ETFs comprised of the country’s equity markets saw their weekly performances climb over 7%.

The iShares Core MSCI Japan IMI UCITS ETF (SJPA) had a positive weekly performance for the first time since early February as its net asset value (NAV) climbed 7.3%.

Additionally, the Vanguard FTSE Japan UCITS ETF (VJPN) and the Lyxor Japan Topix UCITS ETF (JPNL) also had strong performing weeks having climbed 8.5% and 10.3%, respectively.

ETFs pass liquidity test during coronavirus turbulence

A factor that will play significantly into the performance of Japan’s equity market is whether the Olympic Games in Tokyo will be postponed as a result of the coronavirus outbreak.

On 23 March, Canada withdrew its athletes from competing in the Games which is meant to take place between 24 July and 9 August.

The Japan Olympic Committee has since said it is considering postponing the event. If this is to be the case, then Japan’s equity rally could be short-lived.

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