ETF Spotlight on iShares MSCI Japan Index Fund (NYSEArca: EWJ), part of an ongoing series.
Assets: $7 billion.
Objective: Tries to reflect the performance of the MSCI Japan Index.
Holdings: Top holdings include: Toyota Motor (NYSE: TM) 5.03%, Honda Motor (NYSE: HMC) 2.72%, Mitsubishi UFJ Financial (NYSE: MTU) 2.34%, Canon (NYSE: CAJ) 2.34% and Sumitomo Mitsui Financial 1.69% (NYSE: SMFG).
What You Should Know
- EWJ has an expense ratio of 0.54%.
- The fund has 323 holdings.
- Sector allocations include: Industrials 20.69%, Consumer Discretionary 19.62%, Financials 16.61%, Info Tech 13.09%, Materials 7.69%, Health Care 5.98%, Consumer Staples 5.47%, Telecom Services 4.63%, Utilities 3.28%, Energy 1.89% and other 1.05%.
- “The performance of Japan equities has not been very correlated to that of U.S. equities,” according to Morningstar analysts, “but that is because Japan equities have been weak performers because of a sluggish domestic economy and a rising yen, which hurts Japan’s exporters.”
- Supply chain issues and power shortages as a result of the March 2011 earthquake are improving, and rebuilding efforts should provide a lift in domestic demand for industrial products and services, Morningstar adds. “Over the longer term, Japan’s companies are expected to benefit from emerging-markets demand for their capital equipment, consumer products, and electronic goods.”
The Latest News
- In May from April, factory output jumped 5.7%, the largest month-over-month gain since 1953, as plants resumed operations after the series of disasters starting on March 11, reports Keiko Ujikane for Bloomberg. [Single-Country Stock, Currency ETFs See Growth.]
- For the transportation industry, output surged 36% month-over-month as auto producers turned back on their production lines. Manufacturers expect output to increase 5.3% this month and 0.5% in July.
- “The post-quake shock is running its course and production is undergoing a V-shaped recovery,” remarked Hiroaki Muto, a senior economist at Sumitomo Mitsui Asset Management Co., according to the report.
- May retail sales revealed a 2.4% rise from April.
- Analysts estimate Japan’s economy will contract 3% in the second quarter year-over-year before returning to growth for the second half of 2011. [Japan ETF: Economy May Not Turn Around Until Q3.]
For past stories in this series, visit our ETF Spotlight category.
iShares MSCI Japan
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.