Futu Research | ETF Investment Research
[Japanese Equity ETFs] What Japanese equity ETFs are available? How can you invest in the Japanese market from Hong Kong?
Japan's stock market has witnessed a major shift in its underlying narrative. Since 2023, it has posted a steady and highly attractive performance, with the Nikkei Index posting its largest year-to-date gain since 1989, driven by robust corporate earnings growth, improved capital efficiency, and supportive policy measures that bolster market liquidity. Since 2026, the Nikkei 225 has emerged as one of the best-performing major global indices, advancing roughly 24% year to date. As of May 23, 2026, the Nikkei 225 closed at 63,339.07 points, up 1,654.93 points (+2.68%), marking a new closing high not seen since 1950.
Why has the Japanese market continued to rise?
Warren Buffett's view on the long-term pricing dynamics of the stock market can be illustrated by his famous analogy: "In the short term, the stock market is a voting machine; in the long term, it is a weighing machine."
Clearly, Japan is currently experiencing a resonance between the "voting machine" and the "weighing scale."
1. Short-term voting machine
At present, Japan's economy is benefiting from a rebound in consumer spending driven by rising wages and moderate inflation. Corporate profits continue to improve, generating stable cash flows. Excluding the impact of currency depreciation, Japan's per capita GDP denominated in yen has increased; however, when adjusted for the relative weakening of the yen against the U.S. dollar, it has trended downward.
Moreover, there is substantial room for foreign capital inflows, currently standing at only one-quarter of their historical peak. Analysis indicates that the current price-to-earnings ratio of the stock market is roughly 15 to 16 times, significantly lower than the 60 times observed during the bursting of Japan's economic bubble in the 1990s.
2. Long-term weighing scale
Global investors have not only taken note of the long-term share‑buying by international giants such as Berkshire Hathaway in Japan's major trading houses, but they are also closely watching the positive shift among Japanese listed companies in enhancing shareholder value. In 2023, Japanese listed firms demonstrated an unprecedented level of share repurchases, with total buybacks surging to a record approximately JPY 9.6 trillion—marking the second consecutive year of record highs.
Accordingly, setting aside the depreciation of the yen, Japan's stock market has staged a remarkably robust bull run. Moreover, we have an ample array of tools at our disposal for trading.ETFAs a convenient investment tool, it offers investors a simple and efficient way to gain exposure to the performance of the Japanese stock market. A wide variety of ETFs are available across both domestic and international markets; below, we will introduce several representative Japanese equity ETF products.
Japanese equity ETFs listed on the Hong Kong stock market
To investJapanese stock marketIn the Hong Kong stock market, there are three options:
1. $ChinaAMC MSCI Japan Hedged to USD ETF(03160.HK)$: Tracks the MSCI Japan Index (100% USD-hedged), with an annual management fee of 0.5%.
2. $Global X Japan Global Leaders ETF(03150.HK)$: By tracking the FactSet Japan Global Leaders Index, investors can gain exposure to 20 leading Japanese companies spanning diverse sectors, including consumer electronics, computing, automotive, semiconductors, and medical devices. The annual ongoing fee is 0.68%.
3. $CSOP Nikkei 225 Index ETF(03153.HK)$: Launched in Hong Kong by CSOP at the end of January 2024, it is Hong Kong's first ETF that tracks the Nikkei 225 Index. The ETF was listed at HK$78 per unit, with a minimum trading lot of 10 units, and carries an annual management fee of 0.99% of the fund's net asset value.
Japanese equity ETFs in the U.S. stock market
1. $iShares MSCI Japan ETF(EWJ.US)$: Provides access to Japanese equity markets and tracks the MSCI Japan Index.
2. $WisdomTree Japan Hedged Equity ETF(DXJ.US)$This ETF not only invests in the Japanese stock market but also mitigates the impact of exchange-rate fluctuations by hedging against yen‑exchange‑rate risk. For investors participating in Japanese ETFs—and especially for those concerned about potential currency depreciation—this ETF is particularly promising.
3. $Ishares Jpx-Nikkei 400 Etf(JPXN.US)$: Invests in high-quality Japanese companies included in the JPX-Nikkei 400 Index, spanning multiple industries.
4. $JPMorgan BetaBuilders Japan ETF(BBJP.US)$: Tracks the Morningstar Japan Target Market Exposure Index, providing broad exposure to the Japanese equity market.
5. $Vanguard FTSE Pacific ETF(VPL.US)$: Tracks the FTSE Japan Index, which includes companies of various sizes listed on the Japanese stock exchange.
At present, the primary source of uncertainty facing Japanese equity ETFs is exchange-rate risk.
The economic development level, market size, political stability, and regulatory environment of different countries and regions all have a significant impact on the performance of overseas and cross-border ETFs. Therefore, it is essential to conduct thorough research into the target market's macroeconomic conditions, monetary policy, trade relationships, and potential risks before investing.
For Japanese equity ETFs, the risk most likely to result in losses is currency‑exchange‑rate risk.
With$CSOP Nikkei 225 Index ETF(03153.HK)$For example:
Its underlying assets are denominated in Japanese yen, meaning the fund invests in shares of Japanese companies priced in yen. However, in the primary market, when investors make additional investments into the fund (cash subscriptions) or redeem their holdings (redemptions), these transactions are settled by converting U.S. dollars into Japanese yen.
In addition, any dividends distributed by the fund to investors (if applicable) are paid in Hong Kong dollars. This means that the fund's net asset value will be affected by the U.S. dollar exchange rate against…Japanese yen exchange rateImpact of Volatility: If the U.S. dollar appreciates or depreciates against the Japanese yen, the fund's asset value may increase or decrease.
On the secondary market—specifically, the Hong Kong stock exchange—investors trade units of this ETF in Hong Kong dollars. Consequently, investors trading this fund on the Hong Kong market must not only monitor the fund's performance but also keep an eye on fluctuations in the HKD/JPY exchange rate. Exchange-rate volatility can introduce additional costs or losses when buying or selling the fund, and even if the fund's underlying performance remains steady, currency movements may still affect the overall investment return.
Therefore, when investing in Japanese equity ETFs, given the exposure to exchange-rate risk, our research suggests that the simplest approach is to directly select an ETF that provides currency hedging, which can help mitigate depreciation risk. However, as with any coin, there's another side: if the yen appreciates persistently, it could also erode potential returns.
