The Good, The Bad and The Ugly Among Japanese ADRs and ETFs

Japanese stocks have really struggled since benchmarks hit multi-year highs last Monday. The rise in the yen is a double-edged sword, as I have often explained in my posts. Let's take a look at where ADRs and ETFs stand on a monthly and year-to-date basis.

Keep in mind the Nikkei 225 had its biggest loss today since June, falling 3.3% to 16,642. Last Monday the N225 closed at a multi-year high of 18,215.

After five-straight days of selling the benchmark has lost nearly 1,600 yen, or 8.6%. A Japanese news report noted this is 0.1% more than the loss during the same period in Shanghai.

The TOPIX 1st Section lost 3.4% to 1,662.7. Compared to last Monday's 15+ year high close of 1,816.9, the benchmark is down over 150 yen, or 8.5%.

See the end of this post for a list of today's biggest decliners among stocks with ADRs.

The yen has strengthened to the upper ¥115/$1 range after hitting ¥122/$1 in late January, a difference of more than 5%. The stronger yen has helped limit recent ADR and ETF loses to an extent in the U.S., but has certainly prompted broad selling and heavy profit-taking of recent winners in Japan.

The 28 Japanese ADRs listed on the NYSE or trading on Nasdaq had an average return of 1.9% in February and are up 2.8% on the year. (See chart below)

The top-5 ADRs in February:

1. NTT DoCoMo (DCM) +19.3%
2. NIS Group (NIS) +13.2%
3. Sony (SNE) +11.7%
4. Mitsui & Co (MITSY) +11.6%
5. Wacoal (WACLY) +6.3%

The bottom-5 ADRs in February:

1. Nidec (NJ) -9.3%
2. Nissan (NSANY) -8.0%
3. Advantest (ATE) -7.8%
4. Orix (IX) -6.4%
5. Kubota (KUB) -6.0%

Click to enlarge chart

The 10 Japanese ETFs (including the 2 CEFs) trading in the U.S. had an average return of 1.8% in February and are up 3.2% on the year. (See chart below)

Click to enlarge chart

The top two performing Japan ETFs in February were offerings by Wisdom Tree [Japan High-Yielding Equity (DNL) and Japan Total Dividend (DXJ)] which gained 3.7% and 3.4%, respectively. iShares MSCI Japan (EWJ), the most actively traded country-based ETF, ranked third, gaining 3.1%.

Two closed-end funds were the worst performers, with The Japan Equity Fund (JEQ) flat and the Japan Smaller Capitalization Fund (JOF) losing 5.1%.

Today's biggest decliners in Tokyo that have ADRs:

1. NIS Group (NIS) -10.14%, ¥62 ($5.36 ADR equiv. at ¥115.6/$1), Friday ADR close: $6.09
2. Internet Initiative Japan (IIJI) -8.62%, ¥424,000 ($9.17), $9.67
3. Trend Micro (TMIC) -6.06%, ¥3,100 ($26.82), $27.75
4. Nomura (NMR) -5.65%, ¥2,340 ($20.24), $20.67
5. Nidec (NJ) -5.22%, ¥7,260 ($15.70), $16.18
6. Mitsui & Co (MITSY) -5.08%, ¥1,979 ($342.39), $349.06
7. Millea (MLEA) -5.00%, ¥4,180 ($36.16), $36.99

I am also going to list Nintendo (NTDOY), which lost 5.29% to ¥29,740 ($32.16 ADR equiv.), falling below ¥30,000, for the first time since Jan. 11.

Related:

Unwind The Yen Carry Trade With These Two ETFs
How Will a Stronger Yen Affect Japan ETFs?
Japan: Weekly ETF and CEF Performance
Japan: Best and Worst Performing ADRs Last Week
iShares Asia Region ETFs Weekly and YTD Returns
Global ETFs: From Overbought To Oversold

Disclosure: The author owns shares of NIS Group and IIJ and owns iShares Japan and IIJ call options.