Japanese equities have strengthened in the past week as the yen currency weakened. The export-heavy market has been weighed down by an appreciating JPY that recently climbed near an 18-month high.
However, reports of a deteriorating economy, disappointing stimulus measures and a strengthening JPY currency have all dragged on the Japanese equity markets. Year-to-date, EWJ dropped 6.5% and DXJ, which hedged against a weakening yen, declined 17.4%.
Consequently, more money managers are growing pessimistic over Japan’s outlook. For instance, BlackRock is among firms ending their bullish call on Japan – the money manager also downgraded its outlook on Japan from overweight to neutral, citing the stronger yen’s risk to export industry’s earnings and increased volatility.[related_stories]
WisdomTree Japan Hedged Equity Fund