Nikkei Index Revisits Glory Days, Surges To 33-Year Highs: 5 US-Listed Japanese Stocks To Watch
The Nikkei 225 stock market index in Japan is seeing a significant rebound in 2023, recalling memories of its glory days when Japanese technology stocks dominated the global scene.
With a 25% year-to-date increase as of June 6 and at its highest level since July 1990 (almost 33 years ago), Japanese equities have once again piqued the interest of foreign investors.
Factors Driving the Rally: Several major variables have contributed to the Nikkei's comeback. For instance, Japanese exporters benefit from a historically weak Japanese yen, which strengthens their global competitiveness. Furthermore, the appealing and low valuations of Japanese equities are attracting the attention of value-style investors looking for opportunities in an undervalued market.
Furthermore, Warren Buffett's endorsement of Japanese equities has considerably increased the Japanese market's global attractiveness. His multiple bets on Japanese "sogo sosha," or trading house enterprises, have bolstered confidence and improved the global appeal of Japanese equities.
Chart: Nikkei 225 Index Hits Over Three Decades High
Exploring Japanese Equities as a U.S.-Based Investor: There are several ways for investors in the U.S. to obtain exposure to Japanese stocks.
Investing in exchange-traded funds (ETFs) that focus on Japanese equities is one option that provides a diversified strategy. Alternatively, investors can invest directly in Japanese stocks listed in the U.S. via American Depositary Receipts (ADRs), which provide a convenient way to access individual companies within the Japanese equity universe.
Here are a few Japan-related ETFs that a U.S. investor can trade:
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iShares MSCI Japan ETF (NYSE:EWJ): This ETF seeks to track the performance of the MSCI Japan Index, which represents the large and mid-cap segments of the Japanese equity market.
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WisdomTree Japan Hedged Equity Fund (NYSE:DXJ): DXJ aims to provide exposure to Japanese equities while hedging against fluctuations between the Japanese yen and the U.S. dollar. It focuses on dividend-paying companies in Japan.
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JPMorgan BetaBuilders Japan ETF (NYSE:BBJP): BBJP seeks to track the performance of the Morningstar Japan Target Market Exposure Index. The index includes a broad range of Japanese equities, offering comprehensive market coverage.
5 U.S.-Listed Japanese Stocks To Watch
- Honda Motor Co Ltd (NYSE:HMC) is up 33% year to date and with a 12-month trailing price-to-earnings (P/E) ratio of 9.9x
- Sony Group Corp. (NYSE:SONY) is up 30% year to date and with a 12-month trailing P/E ratio of 17.8x.
- Orix Corporation (NYSE:IX) is up 10% year to date and with a 12-month trailing P/E ratio of 10.3x.
- Toyota Motor Corp. (NYSE:TM) is up 9% year to date and with a 12-month trailing P/E ratio of 10.98x.
- Mitsubishi UFJ Financial Group (NYSE:MUFG) is up 3.3% year to date and with a 12-month trailing P/E ratio of 10.2x.
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