Japan appears to be on the path of a sustainable rebound – Vanguard
Vanguard reports that Japan is on a path to sustainable economic recovery after years of stagnation, driven by structural reforms and favorable market conditions. The Bank of Japan's rate hikes and the Federal Reserve's cuts may strengthen the yen against the dollar. While specific stocks weren't highlighted, Seeking Alpha provided year-to-date performances of Japanese ADRs, with notable gains from Mizuho Financial Group (+17.4%) and Canon Inc. (+27.7%). Investors can also consider various Japan-focused ETFs for diversified exposure.
After decades of economic and market stagnation, Japan could be heading towards a sustainable recovery, Vanguard said, thanks to a combination of structural reforms, shifting market dynamics, and favorable external conditions.
“The takeaway for investors is that a market that was easy to ignore in recent decades because of economic stagnation and the BOJ’s bond market dominance now appears to be a potential source of alpha,” Vanguard stated.
The exchange-traded fund issuer went on to add that with the Bank of Japan (BOJ) raising rates and the Federal Reserve lowering them, the gap between Japanese and U.S. interest rates will narrow, likely leading to a stronger yen against the dollar (USD:JPY).
While Vanguard did not mention any specific stocks or exchange-traded funds to watch, Seeking Alpha outlined a handful of popular Japanese ADRs along with each of their year-to-date performances.
- Sony Group Corporation (SONY) -0.7% YTD.
- Panasonic Holdings (OTCPK:PCRFF) -8.5% YTD.
- Toyota Motor Corporation (TM) -3.9% YTD.
- Honda Motor Co. (HMC) +2.8% YTD.
- Nissan Motor Co (OTCPK:NSANY) -27.3% YTD.
- Mitsubishi UFJ Financial Group (MUFG) +15.5% YTD.
- Mizuho Financial Group (MFG) +17.4% YTD.
- Nomura Holdings (NMR) +17.9% YTD.
- Canon Inc. (OTCPK:CAJPY) +27.7% YTD.
- Bridgestone (OTCPK:BRDCY) -7.1% YTD.
Furthermore, for a more diversified stance on Japan, investors can also look at exchange traded funds as an avenue of investment. Spotlighted below are a group of exchange traded funds that offer exposure towards Japan:
Japan Focused ETFs: (EWJ), (BBJP), (DXJ), (FLJP), (FXY), (DBJP),(HEWJ), (EWJV), (DFJ), (JPXN), (SCJ), (DXJS), (FLJH), (YCL), and (YCS).