EWJ Leads the Way in Big Day for Japanese ETFs (EWJ, ITF, VPL)

Includes: EWJ, JEQ, JOF, JPXN, VPL
by: Steven Towns

iShares MSCI Japan Index ETF (NYSEARCA:EWJ) gained 3.28% on the day closing at $14.80, its highest close not only over the past 52-weeks but since April 3, 2000, when it closed at $14.88. Today was also the largest single-day advance for EWJ since September 9, 2005, the last trading day before PM Koizumi resoundingly won a snap election solidifying his last 12-months in office and his postal privatization plans. We all can thank the Fed or at least the Street's interpretation of the Fed's minutes released today and we can also thank San Francisco Fed President Janet Yellen for her comments as well.

I calculate slightly more than 1.0% of today's gains as a bullish reaction to the Fed's minutes release and a 0.85% gain by way of a strengthening yen, which of course was in response to the Fed and means dollar-denominated investments in Japanese funds are in turn worth more. These gains can be added to the 1.37% gain made by the Nikkei 225 Stock Average, the closest benchmark I have for the necessary data and at last we have today's gain of nearly 3.3%.

I have been saying that the key factor for Japanese equities being able to go higher would be the May 10th Fed meeting. Today's events could be a sign of an even stronger bull market to come, unmistakably for Japan and possibly even for the U.S.

Other Japan-related or Japan-specific funds performance today:

    • iShares S&P/TOPIX 150 Index (ITF) +3.15%,$128.74

    • Vanguard Pacific Vipers (NYSEARCA:VPL) +2.61%, $66.79

    • Japan Smaller Cap Fund (NYSE:JOF) +1.82%, $17.30

    • Japan Equity Fund (NYSE:JEQ) +2.19%, 9.33

EWJ 1-yr chart:

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