Japan is a major oil importer. That explains the vulnerabilities of the country’s equity market to conflict in Iran. Over the past month, the MSCI Japan Index is off about 2%.
For now, there isn’t much clarity in terms of how long the conflict will last or if it will morph into a traditional, extended war, which much of the world doesn’t want. However, recent retrenchment by Japanese stocks may provide an opportunity to revisit that previously high-flying market. That includes ETFs such as the WisdomTree Japan Opportunities Fund (OPPJ).
It’s an admittedly short time frame, but for the aforementioned month, OPPJ actually generated modest upside. It blew past the MSCI Japan Index in the process. The WisdomTree ETF merits consideration because it’s outpacing basic rivals. Plus, geopolitical intensity in the Middle East isn’t an indictment of the fundamentals of Japanese risk assets.
OPPJ a Solid Choice for Japan Exposure
Japanese stocks aren’t as inexpensive as they were several years ago. However, a variety of Japan-specific factors, namely Prime Minister Sanae Takaichi, support the bull case for ETFs such as OPPJ. Her Liberal Democratic Party notched a resounding victory in snap elections last month. That underscores the point that voters there like her policies. Investors have good reason to feel the same way.
“Investors have been bullish on Japan since 2023, on the thesis that its long-sluggish economy was looking healthier, earnings growth was reasonable, valuations were cheap, and dividends and stock buybacks were on the rise,” observed Morningstar’s Leslie Norton.
Japan’s snap election is in the rearview mirror. In the U.S., advisors and investors are likely turning their attention to the November midterms. However, market participants shouldn’t gloss over the potential benefits of the Liberal Democratic Party having a super majority. That could have positive implications for funds such as OPPJ, because Takaichi could more easily advance her economic agenda.
Additionally, expected earnings growth this year and the return of top-line growth in 2027 could support OPPJ member firms.
“According to Yardeni Research, the forward profit margin for the MSCI Japan Index is about 9%, up from just over 1% 2009,” added Norton. “While revenue growth is expected to fall by 2.0% in 2026 after advancing 5.8% in 2025, it’s expected to climb 4.4% in 2027 and 3.9% in 2028. Meanwhile, Yardeni expects earnings to rise 11.2% in 2026 and 10.3% in 2027 from an estimated 7.9% in 2025.”
This article was prepared as part of WisdomTree’s general paid sponsorship of VettaFi | ETF Trends. This specific content within and any opinions expressed therein belong solely to VettaFi and do not reflect the opinion or analysis of WisdomTree, its employees, or its affiliates. Content published on VettaFi | ETF Trends is provided for educational purposes only and should not be considered investment or tax advice. For investment or tax advice, please consult a financial professional.
WisdomTree is an independent company, unaffiliated with VettaFi | ETF Trends. WisdomTree has not been involved with the preparation of the content supplied by VettaFi | ETF Trends. It does not guarantee, or assume any responsibility for its content.
Originally published on ETF Trends
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