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EWJ: Taking Advantage Of The Yen Crash

Apr. 04, 2022 3:41 AM ETiShares MSCI Japan ETF (EWJ)DXJ8 Comments
Stuart Allsopp profile picture
Stuart Allsopp


  • At current levels, the yen is simply too cheap to ignore and should act as a tailwind to returns in the EWJ over the coming years.
  • The MSCI Japan, which the EWJ tracks, now trades at a forward PE ratio of 12.8x versus 17.8x for the MSCI World, marking a near-record valuation discount.
  • Analysts are clearly anticipating a continued increase in corporate dividend payouts in line with the long-term trend, which has seen dividends grow at 8.5% annually since 2012.
  • As a major hydrocarbons importer, the biggest risk comes from continued elevated global oil and gas prices.
  • My position in EWJ forms part of a broader portfolio with positive exposure to higher oil prices via the XLE and VDE oil producer ETFs.
Antique map displaying Japan and surrounding areas

KeithBinns/E+ via Getty Images

While Japanese stocks have performed well in local currency terms since my previous article on the iShares MSCI Japan ETF (NYSEARCA:EWJ) in January, the collapse in the yen has resulted in the EWJ being one of the poorest performing

This article was written by

Stuart Allsopp profile picture
I am a full-time investor and owner of Icon Economics - a macro research company focussed on providing contrarian investment ideas across FX, Equities, and Fixed Income based on Austrian economic theory. Formerly Head of Financial Markets at Fitch Solutions, I have 15 years of experience investing and analysing Asian and Global markets.

Analyst’s Disclosure: I/we have a beneficial long position in the shares of EWJ, DFJ either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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