Looking ahead, the government is flirting with the idea of a corporate tax rate cut to 35.64% from 38.01% next spring to promote corporate wage growth, which has been slowing in recent years.
Greater government spending could help weaken the yen currency further. The CurrencyShares Japanese Yen Trust (NYSEArca: FXY) has declined 15.5% year-to-date. [Hedge Fund Action Points to Further Pain for Yen ETF]
As the yen continues to weaken and the Japanese economy expands, investors can take a look at yen currency-hedged Japan equity ETFs, like the WisdomTree Japan Hedged Equity Fund (NYSEArca: DXJ) and db X-trackers MSCI Japan Hedged Equity Fund (NYSEArca: DBJP), which have gained 34.7% year-to-date and 41.6.0% year-to-date, respectively. In comparison, the iShares MSCI Japan ETF (NYSEArca: EWJ), a non-currency hedged ETF, rose 22.5% year-to-date. [Japan ETFs: An Epic Move Could be Near]
For more information on Japan, visit our Japan category.
Max Chen contributed to this article.
Full disclosure: Tom Lydon’s clients own DXJ.