Xtrackers MSCI Japan Hedged Equity ETF

DBJP

Market cap $482M

Nikkei 225 struggles below 50,000 as upside momentum fades. Daily RSI drifts into neutral territory, signaling consolidation.

Xtrackers MSCI Japan Hedged Equity ETF offers yen-hedged exposure to Japanese equities but faces limited hedge value amid muted USD/JPY moves. DBJP's 0.45% expense ratio and hedging costs make unhedged, lower-fee Japanese ETFs more attractive for broad market exposure. Japan's conflicting fiscal and monetary policies introduce FX uncertainty, and end markets are struggling with disposable income for things like automotive.

The Nikkei 225 falls to 49,303 as rate-hike odds for December 19 approach 80%. Electronics, pharma, and industrials lead declines as liquidity expectations tighten.

Nikkei closes at 51,063, extending gains for a second session. Manufacturing confidence hits a four-year high as exports strengthen.

Japan stocks are rallying on the BoJ's dovish stance & Takaichi's pro-growth push. Play the trend via ETFs DXJ, DBJP, HEWJ, and YCS.

Solid growth and ongoing shareholder-friendly reforms are driving Japanese equity gains, keeping us overweight. We see the AI theme playing out globally.

Among APAC equity markets, Australia has a higher beta to oil prices while India, Indonesia and Thailand have lower betas. Domestic political uncertainties have been one main reason for the decoupling trend seen in Indonesia and Thailand.

As the global private equity industry took tentative steps toward recovery in 2024, Japan raced ahead. The value of private equity investment in Japan jumped nearly 41% over the prior-year total in 2024, far outpacing the 25% year-over-year gain in global private equity deal value, according to S&P Global Market Intelligence data.

Today's data were a mixed bag, but the Bank of Japan will pay more attention to the sharp rise in Tokyo's inflation. Tokyo consumer prices rose more than expected to 2.6% YoY (vs 2.2% in July, 2.3% market consensus).

The Yen hedge has not been in holders' favor lately as the currency has rallied. Importantly, the Japanese indices themselves are negatively correlated to the Yen as large cap stocks have large foreign markets, with automotive as an example. The generally export-led economy doesn't benefit massively from a stronger Yen, although domestically it might as the Yen declines have become quite extreme.