While news of the extraordinary disasters in Japan is most disturbing, investor interest for this island nation has skyrocketed in merely a short time, as over a billion dollars spontaneously found their way into the Japan ETFs or exchange traded funds.
Hung Tran, who writes for the Mutual Fund Wire, wrote that in the week that followed the disaster that hit Japan in March 2011, Japan ETFs experienced and inflow of over $1.2 billion. On a single day, which was the 16th of March, the Japanese equity ETFs received a staggering inflow of an estimated value of $700 million, which is the heaviest inflow in one day that has ever been recorded.
Michelle Rama of CNBC reports that Mike Khouw, who is one of the Directors of the Cantor Fitzgerald of U.S. Equity Derivatives Trading, remarks that despite the high interest applicable on Japan ETFs, “the activity we’re seeing is call selling and put buying, and both are fairly negative” and further that “the unusually heavy volume suggests there is some overhang in the Japanese market.”
In wake of the recent disasters, initial estimates have put the damage sustained to over $100 to 200 billion, which mainly affects the infrastructure of Japan that comprises of its railroads, ports, roads, and particularly some of its main nuclear power plants. Hence, an investment opportunity has come knocking at the door and as soon as the efforts for rebuilding get underway, many more people will be put to work, as well as a lot of money will be pumped back into the staggering economy of Japan.
Consumer discretionary, financial and industrial sectors are all expected to be affected very positively by the massive rebuilding of the infrastructure and the pour-in or workers. It is quite well known that Japan unquestionably has the potential to come back, as it has done before. Besides the government is fully resolved to rebuild everything Japan has lost.
In terms of the daily US dollars traded at the Tokyo Stock Exchange (TSE), its equity market is the second largest in the world. Because of the time difference between Japan and the USA, TSE is open for trading when most US market are closed, it offers investors the unique opportunity to invest their dollars at any time of each working day.
Among one of the best ways in which short-term investors can manage to benefit most from the opportunities offered by the stock exchange of Japan is to invest or trade in the ETF that carries the EWJ symbol. It represents the broad market index ETF, which tracks the Japanese stock market. Though on the surface, this may appear as a lucrative idea, it is somewhat complicated when an investor considers the fact that this ETF trades with negligible volatility during the period when markets in the US remain open. Almost all losses and gains, that are associated with the said symbol of EWJ, may only be found when trading session opens or closes in Japan. This is due to the fact that the market in Japan only slightly varies when closed.