iShares MSCI Japan Index (EWJ)

Some countries are being affected by the global slowdown more than others. The iShares MSCI Japan Index (EWJ) is in the mist of a trend downward that has not taken too many pauses. Begun at the beginning of June, the index Exchange Traded Fund (ETF) has dropped 20% from 13.83 to 11.20 on August 25^th.

The ETF

The ETF itself tries to mimic the returns of the MSCI Japan Index through the ownership of stocks within the index. With a very good 0.52% expense ratio, the ETF is an inexpensive way to get exposure to the Japanese index. The annual turnover rate is a low 3% and the dividend yield is 1.64% currently.

Holdings of the ETF

            The ETF holds major Japanese companies Cannon, Hondo Motors, Mitsubishi, Mitsubishi Financial Group, Mizuho Financial Group, Nintendo, Sony, Takedo Pharmaceutical, and Toyota Motors to name the largest. The average price/earnings ratio of the companies held in the ETF is 15.17.

Troubled Financials

            The two financial stocks in the index’s top holdings, Mitsubishi Financial Group and Mizuho Financial Group are experiencing the same issues that America financials are dealing with, a credit crisis. The drag by these financials with the additional commodity price declines are creating the downward pressure on the index that could continue.