Koreans Turning Bullish on Japan (EWJ, ITF, VPL)

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Includes: EWJ, JPXN, VPL
by: Steven Towns

The on-line English version of South Korea's largest circulated daily newspaper, The Chosun Ilbo, reported today that "Korean Investors (are) Bullish on Japanese Funds." The driving forces are favorable FOREX momentum and the recent sell-off of Japanese stocks.

The recent strength of the Japanese yen against the South Korean won boosts the value of yen-denominated Japanese stocks bought using won. Intra-day the exchange rate stands at about W860/Y100, the highest the yen has been since January.

Korean investors seem to be optimistic about Japan's economic recovery and are eyeing the current 6-day sell-off of the Nikkei as an opportunity to pick up "cheap" shares.

This matters to investors in Japanese ETFs and ADRs because the underlying shares will be receiving more buy interest, which could translate into higher share prices unless the bears have their way.