The Nikkei 225 Index, one of Japan’s leading stock market index, saw an increase of nearly 20% in the first quarter of 2024, ranking it among the top-performing equity markets so far this year.
Investing in the Japan stock market hasn’t been in the mind of most investors, but with the market’s strong performance, it might be worth having some Japan stocks and exchange-traded-funds (ETFs) into your portfolio.
Table of contents
- WisdomTree Japan Hedged Equity Fund (NYSEARCA: DXJ)
- iShares MSCI Japan Small-Cap ETF (NYSEARCA: SCJ)
- Toyota Motor Corp. (NYSE: TM)
- Sony Group Corporation (NYSE: SONY)
- Mitsubishi UFJ Financial Group (NYSE: MUFG)
- Sumitomo Mitsui Financial Group (NYSE: SMFG)
- Takeda Pharmaceutical Company Limited (NYSE: TAK)
Stocks in Japan to Watch Out For
WisdomTree Japan Hedged Equity Fund (NYSEARCA: DXJ)
| Underlying index | WisdomTree Japan Hedged Equity Index |
| Assets under management (AUM) | $4.6 billion |
| Expense ratio | 0.48% |
| Dividend Yield | 2.53% |
The DXJ ETF is designed to track the WisdomTree Japan Hedged Equity Index. This ETF offers investors broad based exposure to the Japanese equity market with a twist; it acts as a currency hedge that mitigates exposure to fluctuations of the Japanese yen relative to the U.S. dollar
It’s a great option for investors who believe that Japanese yen will weaken against the U.S dollar but still want to buy Japanese equities.
The top holdings featured in the fund include well-established names like Toyota Motor Corp, Mitsubishi UFJ Financial Group, and Japan Tobacco Inc and spans across industries such as consumer discretionary and industrial.
| Market cap | US$332.7B |
| 12M Forward P/E | 10.71 |
| 12M Dividend Yield | 1.64% |
Toyota Motor Corp. is one of the world’s leading automobile manufacturers, engaging in the design, manufacture, and sale of automobiles like cars, vans, related vehicles and their parts.
The company has seen an overall improvement in performance with EPS, revenue, and EBITDA up from FY2023.
iShares MSCI Japan Small-Cap ETF (NYSEARCA: SCJ)
| Underlying index | MSCI Japan Small Cap Index |
| Assets under management (AUM) | $121.8 million |
| Expense ratio | 0.50% |
| Dividend Yield | 1.91% |
As its name suggests, the SCJ ETF tracks the MSCI Japan Small Cap Index and seeks to provide investors exposure to small cap public companies in Japan. The fund has an expense ratio of 0.50% and AUM of $121.8 million.
Top sectors the fund invests in include industrials, consumer discretionary, materials, information technology, and consumer staples.
Toyota Motor Corp. (NYSE: TM)
| Market cap | US$332.7B |
| 12M Forward P/E | 10.71 |
| 12M Dividend Yield | 1.64% |
Toyota Motor Corp. is one of the world’s leading automobile manufacturers, engaging in the design, manufacture, and sale of automobiles like cars, vans, related vehicles and their parts.
The company has seen an overall improvement in performance with EPS, revenue, and EBITDA up from FY2023.
Sony Group Corporation (NYSE: SONY)
| Market cap | US$103.3B |
| 12M Forward P/E | 15.21 |
| 12M Dividend Yield | 0.49% |
Sony Group Corp is a conglomerate that is best known for the development, design, production, manufacture, and sale of electronic equipment, instruments, and components. The company’s offerings include games, cameras, and electronics like televisions. The company is experiencing a healthy momentum in 2024, with its stock growing by 9.5% year to date compared with the sub-industry’s increase of 7.6%.
Mitsubishi UFJ Financial Group (NYSE: MUFG)
| Market cap | US$119.1B |
| 12M Forward P/E | 11.92 |
| 12M Dividend Yield | 2% |
MUFG offers a variety of financial and investment services including commercial banking, trust banking, international finance, and assets management services. The company’s EPS rose by 3.91% while its revenue rose 4.15% compared to last year.
Sumitomo Mitsui Financial Group (NYSE: SMFG)
| Market cap | US$76.6B |
| 12M Forward P/E | 11.45 |
| 12M Dividend Yield | 2.55% |
The Sumitomo Mitsui Financial Group is one of the 3 mega-bank groups in Japan; it provides financial products and services and operates in retail, corporate, and investment banking segments globally. The firm saw an increase in EPS and revenue from FY2023, up 5.65% and 4.24% respectively.
Honda Motor Co., Ltd. (NYSE: HMC)
| Market cap | US$59.5B |
| 12M Forward P/E | 8.38 |
| 12M Dividend Yield | 2.23% |
Honda Motor Co., Ltd. is a global company most known for their manufacturing prowess and distribution of automobiles like motorcycles.
The company has shown strong room for growth by concentrating its efforts on expanding its lineup of electric vehicles, a move in line with the increasing demand for eco-friendly vehicles.
Takeda Pharmaceutical Company Limited (NYSE: TAK)
| Market cap | US$42.8B |
| 12M Forward P/E | 28.49 |
| 12M Dividend Yield | 4.14% |
Takeda Pharmaceutical Company Limited is a Japanese company that is mainly involved in the pharmaceutical business. The company engages in the research, development, manufacture, marketing, and out-licensing of pharmaceutical products in Japan and overseas.
While the company isn’t anything to shout about, the positive is that its performance has been relatively stable over the past few years, with EPS and EBITDA up from last year.
How to Invest in Japan Stocks
Want to invest in stocks from Japan?
Syfe’s Bundle for Brokerage features a Japan Bundle that encapsulates the essence of Japan’s economic strength, focusing on sectors where the country has established global dominance, such as technology and automotive.
It aims to provide investors with a mix of growth and stability through well-established companies and sector-specific ETFs.
This Bundle is an exceptional opportunity for investors seeking to benefit from Japan’s innovation, quality, and resilience, combined with a significantly higher dividend yield than typically expected from growth-focused investments.
New Syfe users can also receive S$20 in cash credits when you use the promo code ‘SYFEPROMO’.
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