Japan’s stock market soars, currency remains weak
Investors of Japan’s stocks are enjoying handsome returns, buoyed by Japan’s Nikkei stock index breaking a record-high, for four consecutive days, market watchers said Wednesday. This is in contrast to those holding derivatives that are tied to the performance of the country’s wildly depreciated currency, the yen.
Underpinning the high equity market returns are the booming semiconductor industry shares and derivatives that track the performance of Japan’s benchmark index.
According to FnGuide, a financial market data provider, Korea’s exchange-traded funds (ETFs), which track Japanese semiconductors, have produced a year-to-date yield of between 16 and 21 percent.
This is a dramatic improvement since mid-January, when the yearto-date yields were limited to only highs of 3 percent.
The net assets of 12 Korea-listed Japan-tied ETFs stood at 703.8 billion won ($527 million) as of Feb. 26, up significantly from 502 billion won early this year.
Some derivatives designed to track the Nikkei Average generated double-digit returns this year.
In contrast, investors who bet on the appreciation of Japan’s currency have seen their yields plunge to as low as a negative 10 percent.
The Japanese currency traded at about 140 yen per dollar early this year but has since slid to 150 yen.
TIGER Japan Yen Futures ETF, a Korea-listed Japan-tied ETF, for example, generated a yearto-date negative yield of 10 percent.
A Korea Investment Management report said that the yen gaining ground before the year’s end is not a certainty.
“The appreciation of the local currency will lead to a steep plunge in Japan’s Nikkei index composed of many exporter firms,” the report said.