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Japan ETFs Hit Multi-Decade High on Buffett's Approval & More
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The Nikkei index hit a new 33-year high yesterday and is up over 20% year-to-date. Last month, Warren Buffett's Berkshire Hathaway increased its stake in Japan's five largest trading houses. Berkshire had started investing in these companies about three years ago.
Buffett said he likes these stocks' earnings yields and dividends and may consider additional investments. In fact, the Nikkei has paid a higher dividend yield than the S&P 500 for the last two years, according to Bloomberg.
There are many other factors driving Japanese stocks higher. Foreign investors have increased their allocation to Japan amid the debt ceiling showdown in the US and China's weak economic recovery.
Major chipmakers including Taiwan Semiconductor (TSM - Free Report) , Samsung, Micron (MU - Free Report) and Intel (INTC - Free Report) are planning to increase manufacturing in Japan amid rising trade tensions with China.
Japanese GDP expanded at an annualized rate of 1.6% in the first quarter, and inflation rose to 3.5% in April from a year earlier after decades of sluggish economic growth and deflation. The authorities have been encouraging companies to boost shareholder value and improve corporate governance.
While global central banks have been raising rates aggressively to tame multi-decade high inflation, the Bank of Japan continues to maintain a dovish stance. As a result, the Japanese yen has plunged against the dollar over the last two years.
The decline in currency boosts sales and profits for Japanese exporters. Furthermore, due to the strength of the dollar, currency-hedged ETFs have significantly outperformed unhedged Japan funds as well as the S&P 500 index.
The WisdomTree Japan Hedged Equity Fund (DXJ - Free Report) holds dividend paying exporters. Well-known companies like Toyota Motor (TM - Free Report) and Mitsubishi UFJ Financial Group (MUFG - Free Report) are its top holdings.
To learn more about DXJ, the Xtrackers MSCI Japan Hedged Equity ETF (DBJP - Free Report) and the JPMorgan BetaBuilders Japan ETF (BBJP - Free Report) , please watch the short video above.
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Japan ETFs Hit Multi-Decade High on Buffett's Approval & More
The Nikkei index hit a new 33-year high yesterday and is up over 20% year-to-date. Last month, Warren Buffett's Berkshire Hathaway increased its stake in Japan's five largest trading houses. Berkshire had started investing in these companies about three years ago.
Buffett said he likes these stocks' earnings yields and dividends and may consider additional investments. In fact, the Nikkei has paid a higher dividend yield than the S&P 500 for the last two years, according to Bloomberg.
There are many other factors driving Japanese stocks higher. Foreign investors have increased their allocation to Japan amid the debt ceiling showdown in the US and China's weak economic recovery.
Major chipmakers including Taiwan Semiconductor (TSM - Free Report) , Samsung, Micron (MU - Free Report) and Intel (INTC - Free Report) are planning to increase manufacturing in Japan amid rising trade tensions with China.
Japanese GDP expanded at an annualized rate of 1.6% in the first quarter, and inflation rose to 3.5% in April from a year earlier after decades of sluggish economic growth and deflation. The authorities have been encouraging companies to boost shareholder value and improve corporate governance.
While global central banks have been raising rates aggressively to tame multi-decade high inflation, the Bank of Japan continues to maintain a dovish stance. As a result, the Japanese yen has plunged against the dollar over the last two years.
The decline in currency boosts sales and profits for Japanese exporters. Furthermore, due to the strength of the dollar, currency-hedged ETFs have significantly outperformed unhedged Japan funds as well as the S&P 500 index.
The WisdomTree Japan Hedged Equity Fund (DXJ - Free Report) holds dividend paying exporters. Well-known companies like Toyota Motor (TM - Free Report) and Mitsubishi UFJ Financial Group (MUFG - Free Report) are its top holdings.
To learn more about DXJ, the Xtrackers MSCI Japan Hedged Equity ETF (DBJP - Free Report) and the JPMorgan BetaBuilders Japan ETF (BBJP - Free Report) , please watch the short video above.