Is the Global Economy Facing a Once-in-a-Century Crisis?

The coronavirus pandemic is already showing signs of its economic effects around the globe, but Japanese Prime Minister Shinzo Abe says the world is already face to face with a “once-in-a-century crisis.”

Abe’s comments come after the country lifted a national coronavirus emergency order, except for the city of Tokyo and seven other prefectures. The monthlong emergency order was initially declared on April 7 and then later expanded through to May 31, giving local leaders the ability to implement social distancing orders as necessary to stem the tide of coronavirus cases.

Per a MarketWatch report, the “number of new cases has significantly decreased in Japan. Abe urged a slow return to social and economic activity to avoid triggering a resurgence of the spread of the infections.”

“The spread of global infection is never-ending. The world economy is facing a once-in-a-century crisis and is not even comparable to the Lehman shock,” Abe said, with reference to the investment bank that went under during the financial crisis of 2008. As developed nations like the United States are pumping trillions of dollars into the economy to stave off a recession, Abe’s sentiment correlates with these moves, saying that it is “absolutely necessary to prevent chain bankruptcy.”

For exchange-traded fund (ETF) investors looking for international exposure to Japan, here are a few single country funds to consider:

  1. JPMorgan BetaBuilders Japan ETF (BBJP): seeks investment results that closely correspond to the performance of the Morningstar® Japan Target Market Exposure IndexSM. The underlying index is a free float-adjusted market capitalization weighted index which consists of stocks traded primarily on the Tokyo Stock Exchange or the Nagoya Stock Exchange. The fund may invest up to 20% of its assets in exchange-traded futures and forward foreign currency contracts to seek performance that corresponds to the underlying index.
  2. Franklin FTSE Japan ETF (FLJP): seeks to provide investment results that closely correspond, to the performance of the FTSE Japan RIC Capped Index. The FTSE Japan Capped Index is based on the FTSE Japan Index and is designed to measure the performance of Japanese large- and mid-capitalization stocks.
  3. Goldman Sachs ActiveBeta Japan Equity ETF (GSJY): seeks to provide investment results that closely correspond, before fees and expenses, to the performance of the Goldman Sachs ActiveBeta® Japan Equity Index. The fund seeks to achieve its investment objective by investing at least 80% of its assets (exclusive of collateral held from securities lending) in securities included in its underlying index, in depositary receipts representing securities included in its underlying index and in underlying stocks in respect of depositary receipts included in its underlying index. The index is designed to deliver exposure to equity securities of Japanese issuers.

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