Japan ETF Jumps 2% Post-Jackson Hole; New Nikkei Fund Also Up - Barron's (blog)

The battered iShares MSCI Japan ETF (EWJ), whose shares have been beaten down by more than 13% in the past month alone, is finding renewed strength this morning.

After sliding to a Friday low of $9.42 a share earlier, EWJ made a notable leap right after a speech by Fed Chair Ben Bernanke.

U.S. stocks have moved higher as Bernanke left open the door for more stimulus and pointed to the Fed’s expanded September meeting in which more data will be available for policymakers to review.

The ETF’s now trading at its daily high-water mark around $961 a share. For the day, EWJ is up 2.3% while another rival, the Maxis Nikkei 225 Index ETF (NKY), has gained 1.6% so far.

Despite its bruising of late, EWJ is still trading 4% above its low-point following devastating earthquakes and tsunami in March. Its portfolio holds an attractive 1.12 price-book forward valuation, providing exposure to global heavyweights such as Toyota (TM),  Canon (CAJ) and Softbank (SFTBF).

NKY represents the latest rival to the $7 billion EWJ’s dominance in Japan-focused stock ETFs. As the first to track the country’s main equities benchmark, the Nikkei 225, it holds a heavy dose of industrials, tech and consumer-discretionary stocks. It has little exposure to financials, a sector that accounts for 17% of EWJ’s holdings.

In July, the Nikkei 225 rose 4.6%, more than 4 percentage points more than EWJ.

Japanese giant Mitsubishi UFJ Financial holds the licensing rights to the Nikkei. By its count, the Nikkei index return has topped the iShares MSCI by a nearly 2-to-1 margin over the past decade through July.

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