Of course, bullish action in Japanese stocks is often the result of bearish action in the yen. The USD/JPY pair does indicate that that hedged currency funds, such DBJP and DXJ, could thrive next year. The reason being is that the pair currently labors around 101, but some global banks forecast a move to 105 to 110 in the coming months on the basis that the Bank of Japan will enact additional easing measures.
Investors looking for a more focused play on the Topix can consider the unhedged $93.6 million iShares Japan Large-Cap ETF (NYSEArca: ITF). That ETF is up almost 20% this year.
iShares Japan Large-Cap ETF
Tom Lydon’s clients own shares of DXJ.