Buoyed by Abenomics and the slumping yen, Japan exchange traded funds are among the best developed market performers.
Long-slumping China ETFs have caught a bid as the world’s second-largest economy has steadied and investors embraced low valuations and newly announced reforms. In fact, China ETFs new and old, large and small, rallied last month. Collectively, these ETFs saw $1.2 billion in November inflows even as investors pulled cash from other emerging markets. [November Reign for China ETFs]
While a case can be made that fundamentals for China and Japan, Asia’s largest and second-largest economies, respectively, look good, investors looking to get in on the action should consider the near-term technical outlook for Japan’s benchmark Nikkei 225 and the iShares China Large-Cap ETF (NYSEArca: FXI), the largest China ETF by assets. [2014 Could be a Sequel for Japan ETFs]
“The Nikkei Index and FXI have something in common…”they’ve been here before!” Been where? Both have hit falling resistance line (1) several times over the past few years, Nikkei since 1996! Its the same resistance line, will the results be like ground hog day, same thing over and over again?,” notes Chris Kimble of Kimble Charting Solutions.
As Kimble highlights in these charts, the Nikkei is close to bumping into resistance caused by a diagonal downtrend line that dates back to the mid-1990s. Combining the length of time that line has been around for and investors’ mostly positive sentiment toward Japanese equities, if and when that resistance is broken, ETFs such as the Maxis Nikkei 225 Index Fund (NYSEArca: NKY), db X-trackers MSCI Japan Hedged Equity Fund (NYSEArca: DBJP) and the iShares MSCI Japan ETF (NYSEArca: EWJ). [An Epic Move Could be Afoot for Japan ETFs]