Japan: Restructuring with ETFs | ETF Trends

It almost seems insensitive to be discussing investment opportunities in Japan while damage is still being assessed and lives are still unaccounted for. The Japanese are a resilient people and accustomed to bouncing back following difficult times. The prospect of re-building is giving investors a foundation to work with, and Japanese related exchange traded funds (ETFs) should be considered.

The 8.9-magnitude earthquake struck northeast Japan at 2:45 p.m. local time, collapsing buildings 240 miles away in Tokyo, triggering a 30-foot tsunami that swept away everything in its path and killing at least 300 people, reports Gavin Blair for The Christian Science Monitor.  Around 50 aftershocks have rocked the islands since the original quake. Fortunately the damage should just be a fraction of the Kobe quake where the epicenter was in an urban area.

Fires broke out at Cosmo oil refinery in Ichihara city in Chiba prefecture and at Onagawa nuclear power station in Miyagi prefecture. [Japan ETF: Don’t Count It Out.]Deaths have also been confirmed in Tokyo, Chiba, Kanagawa, Ibaraki, and Tochigi. Japan must deal with containing fallout from new technology such as nuclear power plants, transportation, and communication networks. Bullet train services and airports across the regions have come to a halt. Tens of thousands of people have been stranded across Tokyo as all train lines ceased operations.

The government is committed to rebuild quickly…could this segue into a floating bond? Plenty of investment opportunity would come from this creation, possibly with an exchange traded fund (ETF) to invest in the Japanese infrastructure. [ETFs Mixed With Japan Quake and Economic Data.]

And let’s not forget that this rebuilding effort will be  putting more people to work, as they repair the ruined infrastructure. According to Resa Maeda for Reuters, the temperatures and pressure at the No.1 reactor have been rising since its cooling system was knocked out by the earthquake raising worries about a possible radiation leak. Will the nuclear power plant need repair? At this point, we still don’t know. [Japan ETFs : Japan’s Markets Drop As Earthquake Hits Coast.]

Japan is prone to natural disasters and not hesitant to put money and people into getting the country back to full speed.  Industrial, financial and consumer discretionary sectors are all going to be affected by infrastructure build out and more people working.  Here are a couple of ETFs to consider.

  • iShares MSCI Japan Index (NYSArca: EWJ) Industrials 20%; Consumer Discretionary 19%; Financials 18%.
  • SPDR Russell/Nomura Small Cap Japan ETF (NYSEArca: JSC) Industrials 23%; Consumer Discretionary 22%; Financials 15%.

Tisha Guerrero contributed to this article.

The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.