Fallout from the astonishing overnight decline in Japanese stocks is having a predictable impact on popular ETFs such as the WisdomTree Japan Hedged Equity Fund (NYSEArca: DXJ) and the iShares MSCI Japan Index Fund (NYSEArca: EWJ).
The sell-off in Japanese equities, Asia’s best performers in 2013, has also triggered volume spikes in some obscure leveraged ETFs and ETNs that are devoted to the world’s third-largest economy. That is good news for one ETF, but not so much for the others. [Top Selling Japan ETFs Drop 8% On Nikkei Crash]
The ProShares UltraShort MSCI Japan (NYSEArca: EWV), the double-leveraged inverse equivalent of EWJ, is soaring by 12.6% Thursday. Volume in EWV reached nearly five times the daily average in less than the first 90 minutes of Thursday’s U.S. session. EWV had just under $7 million in assets under management as of March 31, according to ProShares data.
EWV’s bullish cousin, the ProShares Ultra MSCI Japan (NYSEArca: EZJ) is, not surprisingly, getting the opposite treatment. EZJ is off 13% on volume that is already approximately five times the trailing three-month daily average. Despite the stellar performance of Japanese stocks this year, EZJ had just $22.1 million in assets as of March 31, according to ProShares data.