Franklin FTSE Japan ETF

FLJP

Market cap $2.69B

The Franklin FTSE Japan ETF is the most cost-efficient Japanese-focused ETF around (expense ratio of just 9 bps) and currently also offers an impressive +5% yield. The ETF's cyclical-heavy portfolio is levered to Japan's economic recovery, supported by a fresh $135B fiscal package and improving manufacturing/export trends. FLJP is priced at a 11-23% discount to its global counterparts and could benefit from upside mean reversion.

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

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's largest labour union group said on Thursday it would seek wage hikes of 5% or more in 2026, aiming for bumper pay raises for the fourth consecutive year to counter inflation despite headwinds from U.S. tariffs.

The Franklin FTSE Japan ETF faces headwinds from Japanese political turmoil, coalition rupture, and uncertainty over government fiscal policy. Political instability threatens the BoJ's rate hike plans, weakening the yen; this benefits exporters but raises concerns for domestic sectors and imported inflation. FLJP's automotive exposure gains from a weaker yen, but US tariffs and slowing exports diminish the upside for the ETF's industrial and consumer discretionary holdings.

Nikkei 225 hits new record high, rising 6.5% since 23 September 2025 amid optimism over Japan's incoming Prime Minister, Sanae Takaichi. Expansionary fiscal policy expected, with higher government spending and increased JGB issuance to boost wages and corporate profits.

A big factor for investors is that Japan's stocks are still cheap—and there are positive catalysts ahead.

Japan's chief trade negotiator has defended a tariffs deal with the U.S., expressing respect for President Donald Trump and calling him a “tough negotiator.”Trade envoy Ryosei Akazawa noted that the pact setting on most Japanese exports to the U.S. at 15% was comparable to a deal between Washington and the European Union.

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