Japan seems to be finally turning around. The country's GDP
grew at an annualized rate of 3.5% during the first quarter of
2013, up sharply from 1% growth recorded during the previous
quarter and substantially stronger than estimates.
It appears that the aggressive expansionary measures taken by
the Abe government, including "unlimited" easing in order to
weaken the currency, make exports competitive and pull Japan out
of its deflationary spiral, are delivering results. Japanese
exports and consumer spending accelerated during the quarter,
though businesses still seemed a bit reluctant to spend. Exports
benefited immensely from a weaker yen-down ~18% year-to-date
against the dollar.
Japanese stocks are up about 45% this year in anticipation of
stronger economic growth. And while the ETF tracking the broader
equity market iShares MSCI Japan Index Fund (
) is up 24% year-to-date, the two currency hedged
--WisdomTree Japan Hedged Equity Fund (
) and MSCI Japan Hedged Equity Fund Fundamentals (
), which provide exposure to Japanese stocks without any exposure
to the currency are up more than 40% during the same period. (
DXJ vs. DBJP: Which is the Better Hedged Japan
So, while it appears that the worst for the Japanese economy
is now over, long lasting results will depend on how policymakers
address the underlying structural problems, that have been
affecting the economy for decades. The government will have to
introduce significant fiscal and structural reforms to maintain
the growth momentum.
Do you think that Japan is now on path to economic recovery
after more than two decades of stagnation?
DB-XT MS JAP HD (DBJP): ETF Research Reports
WISDMTR-J HEF (DXJ): ETF Research Reports
ISHARS-JAPAN (EWJ): ETF Research Reports
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