Some Asian stocks and exchange traded funds (ETFs) set new records yesterday, indicating the economic party remains in full swing.
Japan and its ETF iShares MSCI Japan Index (EWJ) received a big boost after Moody’s Investors Service upgraded the country’s domestic currency debt rating to A1 from A2. Moody’s has high expectations for the new government under Prime Minister Yasuo Fukuda, reports V. Phani Kumar for MarketWatch. It’s the first time Japan’s market the Nikkei 225 entered positive territory since July. Currently, EWJ is up 2.0% year-to-date.
In Hong Kong, the Hang Seng Index rose 2% to end at a new record thanks to soaring interest in China stocks. The Hang Seng China Enterprises Index rose 5.1%. Some experts say the main drive behind the new highs is simply lots of liquidity. Asia holds a lot of growth opportunities now compared to the U.S. and European markets, so it’s where people are moving their money. Another factor increasing the Hong Kong and Chinese markets and ETFs is the plan that has yet to be implemented that will allow domestic Chinese investors to invest in Hong Kong’s markets, which generally are cheaper, reports Jonathan Cheng for The Wall Street Journal. Both the Chinese ETF iShares FTSE/Xinhua China 25 Index (FXI) and the Hong Kong ETF iShares Hong Kong Index (EWH) are at new highs. Year-to-date, FXI is up 72.6%, and EWH is up 36.9%.
For full disclosure, some of Tom Lydon’s clients own EWH.
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