I rate EWJ a Buy, driven by Japan's recovering economy, attractive valuation, and potential Yen appreciation. The main investment thesis is the highly devalued Yen, which I expect to appreciate as the BOJ tightens policy and the USD weakens. Consensus data shows EWJ offers 8% upside plus a 2% dividend, with accelerating EPS growth forecast through 2027.
Shares of General Motors , Ford Motor , and Jeep-maker Stellantis , some of the biggest automakers in the U.S., rallied on Wednesday after news of a trade deal that will reduce tariffs on imported Japanese cars, as investors saw it as a sign of more deals to come.
President Trump will get to decide where to invest Japanese money and the United States will keep 90 percent of the profits, the White House said.
Japanese stocks have outperformed global and US markets year-to-date, sparking interest as a potential alternative to US equities. Despite recent gains, Japan's 5-year performance lags behind the US, with a significant breakout only occurring in late April 2024. This breakout could signal the end of a year-long consolidation, presenting a potential profit opportunity for investors.
After a volatile April, Wall Street has stepped into the defamed May. While many may want to sell this month, some specific ETFs are likely to rise.
Things have been looking down for most stocks and ETFs so far this year. With Donald Trump recently criticizing Federal Reserve chair Jerome Powell over a lack of interest rate cuts, going as far as to refer to him as a “major loser” and “Mr.
Japan's stock market is hitting new highs due to strong fiscal flows from government spending, current account surplus, and rising bank credit creation. Government spending at over 4% of GDP, a positive current account balance, and increasing bank credit creation are driving aggregate demand and asset market growth.
EWJ has barely moved since our HOLD rating on it 11 months ago, and has underperformed global stocks. Japanese authorities are taking efforts to boost the investing climate for domestic investors. Despite offering similar long-term earnings growth as global stocks, Japanese stocks can be picked up at a 25% discount.
Asian stock markets are trading lower on Monday, following negative cues from Wall Street on Friday. Investor sentiment has been impacted by concerns over higher inflation after the US imposed new tariffs over the weekend.
Japan presents significant opportunities amid normalization and corporate reforms in the long-run. Short term risks are significant considering issues such as the weak Yen with appreciation pressure and shaky politics. Equities are relatively cheap compared with global peers but with good reasons.
Japan's market transformation towards shareholder-friendly initiatives and low earnings multiples make EWJ's current consolidation a buying opportunity, despite recent underperformance. EWJ offers diversified exposure to large and mid-cap Japanese equities, with a low 14.7 P/E ratio and a PEG ratio under 1.5. Technical analysis shows EWJ at trendline support with potential for bullish momentum, despite a bearish death cross and flat 200-day moving average.
ETFs, online retail and health care are the focus of today's Big 3. One thing that connects these names are upward trends on their charts.