Franklin FTSE Japan ETF

FLJP tracks a market-cap-selected and -weighted index of Japanese equities.

The Franklin FTSE Japan ETF is value-weighted and heavily exposed to the automotive and industrial sectors, making it vulnerable to a stronger Yen and potential US tariffs. We are optimistic about the Yen due to robust Japanese consumption data, but caution against large-cap investments highly correlated to the Japanese index. Higher rates in Japan could benefit financials and the Yen but hurt the broader market, especially export-reliant sectors like automotive.

FLJP: Tariffs A Dark Cloud Over Automotive-Dominated Index

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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).

Japan: Hotter Than Expected Inflation, Output Rebound Should Support The BoJ's Policy Normalization

Japan's economy enjoyed a strong second quarter, according to official data, which corroborates recent robust survey data. Gross domestic product rose 0.8% in the three months to June, according to initial estimates from the Cabinet Office.

Third Quarter Economy Signals Sought From Flash PMI Data After Japan GDP Shows Rebound

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The “real” policy rate is massively negative, with the new policy rate of 0.25% far below Core CPI of 2.6%. When QT reaches about ¥3 trillion per month in 2026, it would represent a reduction of its JGB holdings of about 0.5% per month.

BoJ Hikes By 25 Bps And Starts QT: Too Little Too Late, But In Right Direction To Prop Up The Plunging Yen

Japan's markets have been strong due to Yen weakness, making Franklin FTSE Japan ETF a good long-term investment option for exposure to Japan's competitive and efficient markets. The FLJP ETF mirrors the FTSE Japan RIC Capped Index, providing broad exposure to large and mid-cap Japanese equities, including major global players like Toyota and Sony. FLJP offers low-cost access to Japan's equity market, but the fund is not currency hedged, posing a risk if the Yen strengthens significantly.

FLJP: A Good Japan Fund, But Be Careful Of The Yen

Japan has been struggling for some time to generate enough velocity in inflation to escape the gravitational pull of deflation. The story for the rest of 2024 and into 2025 is now centered on whether inflation will be sustained at the BOJ's 2% target.

Escape Velocity: Japan's Drift Toward Sustained Inflation

In March, the Bank of Japan abolished its 8-year-old negative interest rate policy, hiking rates for the first time in 17 years by raising its benchmark rate to 0-0.1%. To combat inflation while also avoiding an excessive surge in interest payments, the BOJ is considering passive quantitative tightening.

What's The Next Step For The Bank of Japan?

We'd rather downplay the weaker-than-expected manufacturing data and focus on a solid recovery in retail sales and a reacceleration in inflation, which will be welcomed by the Bank of Japan. Inflation has been quite choppy due to various government programmes and utility prices.

Mixed Japanese Data Supports BoJ's Policy Normalization

By end-April 2024, Japanese equities had outperformed the FTSE All-World index over 12 months and in the year to date. Japan has undertaken significant structural corporate reforms in recent years.

What Has Led To Japan's Come-Back?

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On this week's episode of ETF Prime, host Nate Geraci sat down with VettaFi Senior Industry Analyst Kirsten Chang to discuss Vanguard's new CEO, ETF flows around the globe, and mounting interest in China-based ETFs. Later, Dave Nadig joined Geraci to discuss the push to use ETFs as a share class of mutual funds.

ETF Prime: Chang on Vanguard's CEO, Global Flows, and More

A weak yen is unlikely to end the positive momentum in Japanese equities. The drivers of the recent rally remain, so we stay overweight Japanese stocks.

Weak Yen Unlikely To End Japan's Rally

The Franklin FTSE Japan ETF is mostly value-weighted and has an overweight position in consumer discretionary and IT sectors. The Yen is weak, which is generally good for the FLJP, but it could derail the Japanese consumer, which matters for policy and for the performance of some market sectors. We thought a BoJ pivot might raise the Yen up a bit, but the pivot was underwhelming and it seems structural issues will keep the Yen weak.

FLJP: On Second Thought, The Yen Probably Stays Weak

Masa Takeda, manager of the Hennessy Japan fund, likes insurance and semiconductor shares, and 7-Eleven parent Seven & I.

Japan's Stock Rally Has Room to Run, This Expert Says. What He's Buying Now.

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April was a relatively quiet month for ETFs across the board. U.S. equity inflows took a breather.

Across the Pond: Global ETF Flows Going Strong

March activity data was a mixed bag in Japan. Weak manufacturing weighed on growth in the first quarter of the year.

Japanese Industrial Production Strengthens As Retail Sales Disappoint

Inflation slowed down in March but underlying inflationary pressures are still alive. The BoJ's pause at its next week's meeting is widely expected but markets will pay more attention to the BoJ's quarterly outlook report.

Cooler Inflation Ahead Of The Bank of Japan Meeting

Japan's equity benchmark, the Nikkei 225 Index, has been on a tear in 2024, eclipsing its previous high set back in 1989. As of early April, the index is hovering near 40,000. Solid economic growth, a revamp in the country's tax-free stock investment program and corporate governance reform have helped propel Japanese equities to record highs.

Can Japan's Stock Market Continue Its Record-Setting Run?

The Bank of Japan is set to normalise monetary policy when certain conditions are met, namely inflation, positive real cash earnings, and a recovery in domestic demand growth. We expect the window for normalisation to open from July for about a year before inflation begins to fall below 2%.

The Bank of Japan's New Path Ahead

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The Bank of Japan's historic move to end the country's negative interest rate policy after nearly two decades triggered a jolt upward to new all-time highs for gold against the yen. The BoJ announced it will now hold short-term rates at a still-accommodative 0% to 0.1% and is getting rid of its yield curve control program and ETF purchases.

The End Of Japan's Negative Interest Rates: What It Means For Gold

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Hello! This is MarketWatch reporter Isabel Wang bringing you this week's ETF Wrap. In this week's edition, we look at one of the currency-hedged Japan ETFs, which reached its all-time high on Thursday as the yen weakened after the Bank of Japan's historic interest-rate shift.

Investors push a Japanese ETF to fresh highs, seeking protection from a falling yen

Japan's private sector picked up growth momentum into the end of the first quarter, according to flash PMI data.

Japan Flash PMI Signals Accelerating Growth Momentum And Rising Inflation In March 2024

Kazuo Ueda becomes Governor of the Bank of Japan, continuing the loose monetary policies implemented by his predecessor. The BOJ raises short rates from -0.1% to 0.1%, becoming the last central bank to exit a Negative Interest Rate Policy.

End Of An Era - Bank of Japan Reverses Negative Interest Rate Policy

The Bank of Japan raised interest rates for the first time since 2007 and has eliminated the yield curve control framework. According to the central bank, the virtuous cycle between wages and prices was assessed to have come into sight, bringing the 2% inflation target within a sustainable and stable possibility by the end of fiscal year 2025.

Flash Insights: Bank of Japan - A 'Watchful' Adjustment

The Bank of Japan has now ended decades of unconventional and aggressive monetary easing. Strong wage negotiation results played a crucial role in today's move.

Bank of Japan Pivot Proves Underwhelming For Markets

Franklin FTSE Japan ETF may seem like a solid option for exposure to Japanese equities with low expense ratio and acceptable liquidity. FLJP ETF underperformed against the S&P500 despite the strong rally of the Nikkei 225 index. Lack of FX hedge in FLJP and other Japan ETFs leads to relative underperformance compared to dollar-denominated securities.

News for Franklin FTSE Japan ETF ETF (FLJP)