The international currents, you see, are behaving…peculiarly. While the American markets puff themselves with a certain self-importance, the rest of the world, as if tiring of the spectacle, has begun to stir. The year 2026, it appears, will not be a simple continuation of 2025. Specifically, the Japanese market, that inscrutable island of polite bows and quiet ambition, has begun to…ascend. Not with a roar, mind you, but with the steady, almost unsettling hum of a well-oiled clockwork mechanism. And investors, those restless spirits, are taking notice. The preference for broad-based index funds is understandable, a sort of collective shrug at the chaos. But to single out Japan… that requires a touch more curiosity, a willingness to peer behind the paper screens.
The iShares MSCI Japan ETF (EWJ +0.51%), a fund older than some of the analysts currently pontificating about it, is currently experiencing a…shall we say, a favorable breeze. Thirty years it has existed, a testament to the enduring, if often baffling, nature of Japanese capitalism. It tracks the MSCI Japan index, a rather meticulous accounting of Japanese equities, weighted by size, as if sheer bulk somehow equates to inherent worth. A novice investor, one might argue, could stumble into this fund and not immediately lose their shirt. But, as with all things, a little scrutiny is advisable. One doesn’t simply wander into a Zen garden without first removing one’s shoes.
Elections, and the Illusion of Control
Even in the supposedly rational world of American finance, one cannot escape the specter of politics. Elections, those grand exercises in orchestrated delusion, have consequences, as any seasoned observer of human folly can attest. And Japan, it turns out, is not immune. The recent elevation of Prime Minister Sanae Takaichi, the nation’s first female leader, is…interesting. Not merely for the historical novelty, though the paperwork alone must be a bureaucratic nightmare, but for her policies. The Liberal Democratic Party, a name that suggests a certain…optimism, secured a resounding victory, a triumph of carefully crafted messaging and, perhaps, a general weariness with the status quo.
For the investor, Takaichi’s popularity is not merely a footnote. She is viewed, quite remarkably, as bold. A quality rarely associated with Japanese politicians, who generally favor a sort of polite circumlocution. She proposes stimulus, massive injections of capital into technology, a desperate attempt to reignite a decades-long struggle against deflation. It is a curious reversal, this desire for inflation, a condition viewed with near-apocalyptic dread in the United States. But Japan, you see, is a different beast. They crave the stirrings of wage growth, the illusion of prosperity. And the iShares ETF, with its substantial weighting towards consumer discretionary and tech stocks (a full 30%, a rather alarming concentration, if you ask me), stands to benefit.
Shareholder Rewards: A Change in the Wind
Another curious development: Japanese companies, those historically tightfisted guardians of capital, are beginning to…share. The return on equity (ROE) for the MSCI Japan index is exceeding its 15-year average, a sign that something is shifting. For decades, these companies generated prodigious cash flow, but hoarded it like misers guarding their gold. Now, compelled by government reforms (a rather blunt instrument, but effective, apparently), they are returning more cash to investors. Dividends are increasing, buybacks are accelerating. It is as if a dam has broken, releasing a torrent of pent-up capital. As of January 31st, the iShares ETF boasted a trailing-12-month dividend yield of 4.22%, a rather respectable figure.
And the share buybacks! A frenzy of repurchases, exceeding anything seen in the previous decade. It is as if these companies, realizing the futility of endless accumulation, are simply…consuming their own stock. A peculiar, almost self-cannibalistic act, but one that, undeniably, boosts the fund. One can only wonder what sort of accounting sorcery is at play. The Japanese, after all, are masters of illusion.
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2026-02-16 22:32