This year has been one of the best years for the stock market in history — and it's not just U.S. stocks that have been rising. Equities around the world have been on a tear.
Since Abe's victory on Oct. 22, the benchmark Nikkei 225 jumped nearly 7 percent and now trades at its loftiest level in 25 years.
That's caught the eye of investors, who, since the election, have added a combined $900 million to the two largest Japan ETFs, the $17.7 billion iShares MSCI Japan ETF (EWJ) and the $9.3 billion WisdomTree Japan Hedged Equity Fund (DXJ) — year-to-date the two ETFs still have combined outflows of $650 million.
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The Nikkei hasn't touched a record high since 1989, when it reached nearly 39,000 amid a ballooning asset price bubble in the country. Today the index is still well below that level, at 23,000, but some analysts say the rally in Japan's stock market has much more room to run.
If that's the case, EWJ and DXJ, which are up this year by 21.9 percent and 20.2 percent, respectively, could continue to outperform. For comparison, the SPDR S&P 500 ETF Trust (SPY), which tracks large-cap U.S. stocks, is up 17.5 percent so far in 2017.
YTD Returns For EWJ, DXJ, SPY
One of the analysts who has a bullish view on Japan is Jesper Koll, CEO of WisdomTree Japan. WisdomTree is the issuer of the second-largest Japan ETF, DXJ, and the fifth-largest Japan ETF, the WisdomTree Japan SmallCap Dividend Fund (DFJ).
In Koll's view, sales for Japanese firms will easily grow faster than the consensus expectation, while the Japanese yen will be weaker than many anticipate, bolstering the bottom line for companies in the country.