FLJP - FLJP: On Second Thought The Yen Probably Stays Weak
2024-05-12 02:59:47 ET
Summary
- The Franklin FTSE Japan ETF is mostly value-weighted and has an overweight position in consumer discretionary and IT sectors.
- The Yen is weak, which is generally good for the FLJP, but it could derail the Japanese consumer, which matters for policy and for the performance of some market sectors.
- We thought a BoJ pivot might raise the Yen up a bit, but the pivot was underwhelming and it seems structural issues will keep the Yen weak.
- The ball is in the Fed's court as to whether the Yen recovers, which incrementally wouldn't be great for FLJP.
- Nonetheless, we are overweight Japanese markets even assuming the Yen makes a rise, even if there might be better portfolios to hedge that risk than the FLJP.