Last year, the yen also depreciated after Prime Minister Shinzo Abe’s ruling coalition acquired a majority in the parliament’s upper house. Japanese equities rallied and the yen weakened on hopes that the more hands-on administration would enact further measures to support the economy.

Investors, though, can position ahead of any further additional stimulus measures through currency-hedged Japan country-specific ETFs. As the name suggests, a currency-hedged ETF strategy helps diminish the negative effects of a depreciating local currency against the U.S. dollar – if a foreign currency weakens against the USD, international investors would generate a lower USD-denominated return.

Output expansion was also accompanied by greater inflationary pressures in January, with companies’ input prices rising at the fastest rate in just over two years. Higher costs for raw materials and fuels were primarily behind the increase in input prices, as well as the yen’s depreciation,” adds Markit.

For more information on the Japanese market, visit our Japan category.

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