Why Did Japan’s Equity Outperform since October?
Trade Surplus Data Strengthened Japanese Equity
Japanese equity
On November 18, Japan’s trade data were released by the Ministry of Finance Japan. For October, Japan’s trade hit a surplus of 111.5 billion yen. Japan’s export and import data presented a stronger economy. The data rose in October—compared to September.
On a monthly basis, Japan’s export volume rose 2.7% in October—compared to 0.9% in September. The import volume rose 2.5% in October—compared to 2.1% in September.
Due to the rise in exports, most of the export-oriented stocks like Toyota (TM), Honda (HMC), Nissan (NSANY), and Toshiba provided a positive return.
From October to November 18, the Nikkei 225—Japan’s benchmark index— provided a return of ~13%. It outperformed most global market indices during that period. During the same period, the iShares MSCI Japan ETF (EWJ) provided a return of 8.5% compared to the iShares MSCI All Country World Index’s (ACWI) 7% return. The above graph shows that EWJ outperformed ACWI.
ACWI invests in large and giant capitalization stocks like Apple (AAPL), Microsoft (MSFT), ExxonMobil (XOM), Johnson & Johnson (JNJ), and Wells Fargo (WFC).
EWJ rose 0.48% on November 18
The trade data released ahead of the Bank of Japan’s meeting. On November 19, there will be an announcement about the Bank of Japan’s statement on the interest rate. Investors usually keep an eye on the Bank of Japan’s statement.
EWJ is an important measure of Japanese equity. It rose 0.48% on November 18. It closed at $12.56.
In the next part, we’ll analyze how the auto manufacturing industry outperformed other industries in Japan.
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