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Did Pokemon Go Mania Boost Japan ETFs?

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After a disappointing first half, Japan stocks are on a roll this week. Nikkei stock index is up about 7% this week even though it’s still down about 15% this year.  And one Japanese stock—Nintendo (NTDOY - Free Report) --is up more than 60% this week on anticipation of blockbuster profits from wildly successful Smartphone game “Pokemon Go”. We do not know how profits on this augmented reality game will be distributed and how much of those will go to Nintendo as Nintendo has a minority stake in the game.



The positive momentum in the broader Japanese stock market is mainly a result of Prime Minister Shinzo Abe’s sweeping victory in elections over the weekend. With his win, his ruling coalition has majority control in both houses of parliament. The yen which has been surging this year, thanks mainly to its safe haven status, has come down about 3% this week. A weaker yen makes Japanese exports more competitive.

Abe’s win has led investors to believe that the government will be able to push Abenomics agenda further. The government is now expected to unveil a new stimulus package of more than ¥ 10 trillion.

Abenomics was initially seen as a success after its launch about three years back thanks to massive monetary and fiscal stimulus but after the initially rebound, stocks stagnated as the problems with the economy were much deeper. Abe lacked the political support for structural reforms, which was the third arrow in Abenomics program. He is now expected to take some bold steps on structural reforms.

There are also rumors of “helicopter money” being included in the package after a meeting between former U.S. Federal Reserve Chairman Ben Bernanke and Shinzo Abe. Helicopter money is an extreme form of monetary stimulus; it could involve the central bank printing money to fund government spending or to give people cash.

Investors looking to bet on Japanese equities in view of their brightening outlook should consider currency hedged ETFs like WisdomTree Japan Hedged ETF (DXJ - Free Report) and WisdomTree Japan Hedged Real Estate ETF . To learn more please watch the short video below:
 



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