Last week was Wall Street’s worst phase since 2008 that saw the rapid spread of the coronavirus. Globally confirmed cases crossed 350,000 while death toll exceeded 15,000. This spurred the need for quarantine, lockdowns and imposition of restrictions on daily life.
Analysts anticipate this impasse to be the ‘worst’ financial crisis since 1929 and Wall Street went berserk. Amid such crisis, Japan’s economy and its stock market showed great resistance to the coronavirus panic sell-offs despite having geographical proximity to the epicentre of the pandemic, China.
The reason being very few coronavirus cases (more than 1000 so far among which death toll was 41) reported in Japan. Many Japan ETFs gained more than 1% last week when Wall Street saw their worst sell-offs since 2008 (read: Wall Street Saw Worst Week Since 2008: Top ETF Stories).
How Japan Lessened Its Vulnerability
Per Bloomberg, social distancing, which is the need of the hour is a norm in Japan and that’s why the coronavirus is spreading much slower there than any other affected places. Secondly, wearing a surgical mask is almost a common practice in Japan.
“Japan is a hard-working society and the spread of productivity-sapping sickness is always a concern,” per an article published on Japantoday. The society seems to have a conservative culture. Apart from checking someone from breathing out infectious droplets while coughing or sneezing, a mask signals “other people to keep their distance.”
Apart from the slower increase in COVID-19 cases, Japan’s Prime Minister Shinzo Abe plans to dole out a massive pandemic stimulus. Also, the probable purchase of exchange-traded funds by the Bank of Japan and public pension funds offered support to Japan shares.
The optimism that the 2020 Olympics may see the light of day after the International Olympic Committee (IOC) hinted at postponing the Games for the first time. Otherwise, cancelation of Olympics could have hurt Japan's GDP by 1.4%. All these factors led investors to buy the dip.
As a matter of concern, Wall Street is in the bear market territory now. The , the Jones and the lost 15%, 17.3% and 12.6% last week, marking its worst week since 2008. But several Japan ETFs walked opposite. Obviously, the ones that are currency-hedged in nature stood out better than their un-hedged cousins as the greenback has been stronger lately (read: U.S. Dollar Climbs: ETFs to Gain/Lose).
Below we highlight a few Japan ETFs that stayed steady past week (as of Mar 23, 2020).
WisdomTree Japan Hedged SmallCap Equity Fund DXJS — Up 13.75%
WisdomTree Japan Hedged Equity Fund DXJ — Up 9.3%
iShares Currency Hedged MSCI Japan ETF HEWJ — Up 10.6%
WisdomTree Japan SmallCap Dividend ETF DFJ — Up 8.3%
Xtrackers MSCI Japan Currency-Hedged Equity Fund DBJP — Up 10.9%
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WisdomTree Japan Hedged Equity ETF (DXJ): ETF Research ReportsWisdomTree Japan SmallCap Dividend ETF (DFJ): ETF Research ReportsiShares Currency Hedged MSCI Japan ETF (HEWJ): ETF Research ReportsWisdomTree Japan Hedged SmallCap Equity ETF (DXJS): ETF Research ReportsXtrackers MSCI Japan Hedged Equity ETF (DBJP): ETF Research ReportsOriginal postZacks Investment Research
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