To The Moon

Yesterday, the Nikkei 225 rose more than 1.2% at one point, breaking above the 59,000 mark and approaching the key 60,000 level, setting yet another record high.

Since the start of the year, the Nikkei 225 has surged nearly 17%, ranking among the top performers across major global equity indices and significantly outperforming both US and Chinese markets.

In terms of Japan-related ETFs, performance has been solid so far this year. The largest Japan broad-based ETF, $iShares MSCI Japan ETF(EWJ)$ , is up 14.54% year to date. $JPMorgan BetaBuilders Japan ETF(BBJP)$ has gained 14.50%, while $Franklin FTSE Japan ETF(FLJP)$ has risen 14.92%. Meanwhile, $WisdomTree Japan Hedged Equity Fund(DXJ)$ has advanced 17.78% year to date, outperforming most traditional unhedged Japan funds.

On the morning of Feb. 26, gains were initially driven by reinforced AI investment expectations alongside the previous rally in US stocks. The Nikkei briefly touched 59,000 for the first time and closed at 58,753. Nvidia’s strong earnings the day before strengthened the view that AI capital expenditure remains robust. Semiconductor-related stocks opened higher, but after the sharp gains on Feb. 24–25, profit-taking emerged, narrowing advances and leading to intraday pullbacks.

Beyond equipment makers, parts of the AI hardware supply chain also contributed early strength. Memory-related companies such as Kioxia benefited from improving data-center demand. Investors believe global compute buildout is still ongoing, positioning Japan — a key supplier of semiconductor equipment and materials — to continue benefiting from sustained AI spending momentum.

In other words, as long as global capital remains constructive on AI, semiconductor and hardware sectors are likely to maintain a positive trend, supporting chip and hardware supply-chain names in Japan and Korea.

On Feb. 27, Tokyo core CPI came in at 1.8% year on year, below the BOJ’s 2% target, while headline CPI was 1.6%. Energy prices fell 9.2% from a year earlier due to a three-month utility subsidy program launched in January by Prime Minister Sanae Takaichi, reducing inflation by roughly 0.25 percentage point. Food inflation also eased from 2025 highs as base effects kicked in.

Following the data, the yen fluctuated around 156 per dollar. Markets maintained expectations of a gradual rate-hike path ahead of the BOJ’s March 19 meeting. The cooling inflation reading reduced pressure for rapid tightening, supporting banks and exporters, while the Nikkei held above the 58,800 level.

Topix bank shares rebounded after a sharp drop on Feb. 25. The banking subindex rose 3.3% yesterday and gained another 1.98% today, becoming the largest contributor to Topix gains. After earlier weakness linked to the nomination of dovish BOJ board members, investors reassessed earnings prospects as long-term yields remained elevated. Major lenders such as Mitsubishi UFJ and Sumitomo Mitsui moved higher.

Currency movements also provided support for export-oriented companies. On Feb. 26, USD/JPY fluctuated around 156, with a relatively weak yen boosting earnings expectations for exporters. Heavyweights such as Toyota, Sony and Hitachi attracted buying interest, helping lift overall market capitalization.

Related ETF:
$iShares MSCI Japan ETF(EWJ)$ has approximately $20.18 billion in assets under management, making it the largest broad-based Japan ETF. With an expense ratio of 0.49%, its holdings include key names such as Toyota, Sony and Mitsubishi UFJ. The fund closely tracks the structure of the Nikkei and Topix, serving as a core vehicle for investors seeking broad exposure to the Japanese equity market.

$JPMorgan BetaBuilders Japan ETF(BBJP)$ has approximately $16.08 billion in assets under management and charges an expense ratio of 0.19%. Its exposure is broadly similar to EWJ, covering major large-cap Japanese companies, but with a clear cost advantage. The lower fee structure makes it more attractive for long-term investors who prefer a relatively steady, core allocation to Japan equities.

$Franklin FTSE Japan ETF(FLJP)$ has approximately $3.21 billion in assets under management and charges a low expense ratio of just 0.09%, placing it among the cheapest Japan-focused ETFs. It tracks the FTSE Japan Index and offers broad exposure, holding 489 constituents — significantly more than EWJ’s 183. This wider diversification, combined with its low cost, makes it well suited for long-term, passive allocation to Japanese equities.

$WisdomTree Japan Hedged Equity Fund(DXJ)$ has approximately $6.57 billion in assets under management and an expense ratio of 0.48%. It employs a currency-hedged strategy that offsets yen exposure against the US dollar, helping reduce the impact of exchange-rate fluctuations. This structure makes it more suitable for investors who want exposure to Japanese equities while managing currency risk.