Investing In Japan Post-Nuclear Tragedy (EWJ)

In the wake of the earthquake tragedy that struck Japan late last week, not only have thousands lost their lives, homes and other property, the 8.9 magnitude quake has put an immense damper on the Japanese economy.

As Japan struggles to prevent a nuclear disaster as well as rebuild after the devastating earthquake, the disaster caused a massive selloff of the equivalent of $287 billion from the Tokyo stock market.

Japan's benchmark Nikkei (.N225) average fell over 10%.
Also demonstrative of the hit to the Japanese economy is Matthews Japan Investor (MJFOX), a mutual fund which has took a near 10% hit Monday. This fund invests at least 80% of its assets in stocks located in Japan.

Investors may be wondering what steps to take in reaction to huge hit the Japan stock market has been subjected to in the aftermath. Now might offer an attractive entry point for an investor, in either individual Japanese stocks or an ETF such as iShares MSCI Japan Index EWJ which has taken a 7% hit and continues to fall in after-hours trading. With the nuclear reactor situation still uncertain following a blast that has already leaked radiation into the atmosphere, investors remain on edge about the outcome and what it may mean for the Japanese market and the global markets as a whole. On the other hand, the pessimistic investor may wish to hold off entering into long positions in Japanese securities or ETFs which follow the Japanese economy; the Japanese market may have further to drop before it hits bottom.

However, the optimistic investor may believe now is the time to jump into the Japanese market. There is no doubt it has experienced a severe drop in the last day. Perhaps it is a market overreaction to the tragedy, and prices will slowly return to pre-earthquake levels.

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