After losing about 15% in 2011, exchange traded funds that invest in Japan have started the new year strong on hopes the country can continue to rebound from last year’s devastating earthquake and tsunami.
Japanese stocks soared on Tuesday as the Topix Index posted its best rise in 10 weeks. [Can Japan ETF Rebound with Economy?]
“The U.S. has been surprising people with some pretty good numbers and that’s helped to lift the mood, which has gotten too pessimistic,” Koichi Kurose, chief economist in Tokyo at Resona Bank Ltd., said on Bloomberg BusinessWeek.
Yet investors are still keeping a wary eye on Europe’s debt problems, which pushed the euro and global stocks lower on Thursday. [ETF Espresso: Euro Falls After French Bond Auction]
“Problems sparked by the European debt crisis are reigniting and people in the market have reaffirmed that the situation has not changed,” Mitsushige Akino at Ichiyoshi Investment Management Co., said on Bloomberg. “That’s weakening the euro and hurting exporters with a heavy reliance on Europe.” [Japan ETF Down 18% This Year]
The fallout from last year’s earthquake, tsunami and nuclear disaster still resonate in Japan and the economy is grappling with the effects. Analysts warn that Japan must keep up with developments such as the latest free-trade pact with the United States, modeling South Korea. Membership in the Trans-Pacific Partnership will also help offset the damaging effects of the rising yen, reports John M. Glionna for The LA Times.
Japan’s economy will also have to deal with the rising threat to the agriculture sector of the country. In Japan, there are about 2.4 million farming households and the country’s agriculture sector has already lost $30 billion due to the effects of March’s tsunami. Farmers in Japan are dealing with a lagging economy and natural calamity which threaten a 2,500 year old way of life, explains Glionna.