Additionally, even if an improving global economy supports export growth, Ishida cautioned that overseas shipments may not expand much since many companies have shifted factories overseas.
“It’s also uncertain how much the (yen’s) decline will lead to an expansion in export volume,” Ishida added.
In contrast, small-cap Japanese stocks have been outperforming as they benefit from an expanding local economy. Year-to-date, the WisdomTree Japan SmallCap Dividend Fund (NYSEArca: DFJ) is up 7.4%, iShares MSCI Japan Small-Cap ETF (NYSEArca: SCJ) rose 7.1% and SPDR Russell/Nomura Small Cap Japan ETF (NYSEArca: JSC) increased 5.3%. Additionally, the WisdomTree Japan Hedged Small Cap Fund (NasdaqGM: DXJS), which hedges against an appreciating yen currency, is 6.1% higher so far thi syear. [Big Upside for Small Cap Japan ETF]
For more information on Japan, visit our Japan category.
Max Chen contributed to this article.