WisdomTree Surges After Japan's Election Result: Here's Why

WisdomTree Investments, Inc. (NASDAQ:WETF) saw its shares surge almost 6%. The same day S&P closed at an all-time high and NASDAQ ended at a 2016 high. It’s curious what led to the rise in WisdomTree stock.

It seems the jump in WisdomTree shares was driven by Japanese election results. This again is no surprise.

Foremost, a resounding victory for Japan’s Liberal Democratic Party led by Prime Minister Shinzo Abe has ensured that Abenomics – economic reforms pushed by Shinzo Abe – stays in place. Abe said, “We have to accelerate Abenomics to meet the public’s expectations.”

Keith Henry, founder and representative director of Asia Strategy in Tokyo, said, “He will need to quickly show progress on needed domestic regulatory reforms, or the Japanese people -- and the financial markets -- could quickly lose patience.”

Again, the landslide win for Abe led to a 4% surge in Nikkei on Monday, while the yen declined more than 2% against the U.S. dollar. The fall in the yen will help currency-hedged Japanese funds to become attractive.

Hence, WisdomTree Japan Hedged Equity Fund (DXJ), one of the major currency-hedged funds of WisdomTree, is likely to get a boost in flows. In fact, DXJ rose nearly 5% on Monday.

For the past few quarters, given the U.S. dollar’s weakening against most global currencies, DXJ had been witnessing significant outflows. However, following the Japanese election, with the appreciation of the U.S. dollar against the yen, it will help more investors push for the fund.

So, WisdomTree stands to gain from the Japanese election results.

Currently, WisdomTree carries a Zacks Rank #4 (Hold).

Some better-ranked finance stocks worth considering include BofI Holding, Inc. (NASDAQ:BOFI) , EverBank Financial Corp. (NYSE:EVER) and Legg Mason Inc. (NYSE:LM) . All these stocks carry a Zacks Rank #2 (Buy).