Will Trillion Dollar Stimulus Help Japan's Economy Bounce Back?

Japanese leadership, mainly Prime Minister Shinzo Abe, is feeling the pressure from the country amid the coronavirus pandemic. Criticized for a less-than-stellar response to the virus, leadership has responded with a $1 trillion stimulus package, but is it enough to allow the country to bounce back?

Per a Foreign Policy report, “Abe has now swung in the other direction. In addition to imposing a state of emergency on nearly half of the country’s population, he has also unveiled a multipronged economic stimulus package he claims is worth nearly $1 trillion in total. That has raised the question of whether the world’s most indebted country can afford that kind of spending.”

It didn’t inspire much confidence when Abe announced via national television that the country is “in the worst crisis since the end of World War II.” However, Abe did evoke some optimism by saying that the monetary resources would make it to the people as quickly as possible.

“Unlike other stimulus packages before, this program will reach households and companies quite quickly. It will also be highly necessary,” said Martin Schulz, chief economist at the technology firm Fujitsu. “We know from other economies that consumer demand initially drops by as much as 30 percent during a lockdown.”

An Active Japan-Focused Fund

Investors looking for diversification via Japan equities should take a look at the Goldman Sachs ActiveBeta Japan Equity ETF (GSJY). 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 “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.

Investors looking for broad single-country exposure to Japan can look at the iShares MSCI Japan Value ETF (EWJV). EWJV seeks to track the investment results of the MSCI Japan Value Index (USD).

The index is a free-float weighted index consisting of large- and mid-capitalization Japanese securities exhibiting overall value style characteristics. The fund generally will invest at least 90% of its assets in the component securities of the underlying index and in investments that have economic characteristics that are substantially identical to the component securities of the underlying index and may invest up to 10% of its assets in certain futures, options and swap contracts, cash and cash equivalents

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