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The team at Satrix has clearly been busy. They’ve launched two brand new ETFs to help South Africans tweak their exposure to offshore markets.

If you’re ready to learn more about Europe and Japan, then you’re in the right place.

Why does it matter? For most South African investors, offshore exposure is really just a proxy for US tech names. It’s hard to avoid this outcome, as Big Tech has been the driving force of most global indices, let alone US indices. The Magnificent Seven are everywhere.

Well, almost everywhere.

Diversification across both sectors and regions is important for investors. In that spirit, Satrix has launched the Satrix Stoxx Europe 600 ETF and the Satrix MSCI Japan ETF.

Siyabulela Nomoyi of Satrix joined me to unpack these offerings. This included discussions on:

• The macro trends in each region and how they have such different top-of-mind items at the moment
• The nature of the underlying indices tracked by these ETFs and how they vary in terms of market depth and sector exposures
• The investment thesis for each regions and what the drivers of returns will likely be over time
• How both products should be seen as complementary to the global picture

If your portfolio is a Lego structure, Satrix has just given you two new pieces.

This podcast was first published here. 

Disclaimer:

Satrix Investments (Pty) Ltd & Satrix Managers (RF) (Pty) Ltd is an authorised financial services provider. The information does not constitute advice as contemplated in FAIS. Use or rely on this information at your own risk. Consult your Financial Adviser before making an investment decision. While every effort has been made to ensure the reasonableness and accuracy of the information contained in this document (“the information”), the FSP’s, its shareholders, subsidiaries, clients, agents, officers and employees do not make any representations or warranties regarding the accuracy or suitability of the information and shall not be held responsible and disclaims all liability for any loss, liability and damage whatsoever suffered as a result of or which may be attributable, directly or indirectly, to any use of or reliance upon the information. For more information, visit https://satrix.co.za/products

Full transcript:

The Finance Ghost: Welcome to this episode of the Ghost Stories podcast. I get to chat today to Siyabulela Nomoyi, who is no stranger to the Ghost Mail audience. Siya, you’ve done a number of these with me. Quite the broadcaster, actually, you’ve become, which is lovely. I’ve had a lot of fun with you over the past few years doing these podcasts. 

We have a double-header today, so we’ll jump straight into it. There are two new ETFs being listed by Satrix at basically the same time – clearly, you guys have been busy. Congratulations on that. And I can’t wait to dig into both of them with you.

Siyabulela Nomoyi: Hi, Ghost. Always great to be on your podcast. Hi to the listeners, as well. Thanks for inviting me again. 

Lots to unpack on this recording, so naturally, I’m very excited as always to be here and to speak to our new offerings right now. Lovely to be here. Thanks, man.

The Finance Ghost: Absolutely. Just so our listeners know what’s coming, we’re going to talk about two ETFs today. The Satrix Stoxx Europe 600 ETF (which, as the name suggests, is based on European stocks) and the Satrix MSCI Japan ETF (again, no prizes for guessing that that is based on stocks in Japan).

Both offshore, neither of which – drumroll please – is in the US. How interesting! 

Let’s start with Europe and with the number ‘600’ in the name. I can only assume that that is the number of stocks in this thing. That’s a lot. That’s 100 more than the S&P 500, so I would imagine, especially given the European landscape, there are lots of small-caps in there, in addition to some of the big names.

And obviously, lots of interest around Europe at the moment. We’ve got Emmanuel Macron with his very cool shades – I don’t know what you thought of his sunglasses at Davos, but I thought they were pretty rad, to be super honest.

They need to become a lot more economically independent in Europe. And not just economically, but also just in terms of regional security. 

There have been many, many years (decades, even) of relying a little bit too much on the United States to be the global Head Boy. Now, Europe needs to step up and do more of that kind of thing. 

And that obviously creates interesting opportunities, right? Because they need to switch their industrial machines on once again. That’s the theory, at least – but no shortage of critics. I’ve heard Europe referred to as an “open-air museum with little more than a tourism industry” – probably a little bit unfair. There’s also the old joke about Europe that they “regulate rather than innovate”.

So, they’ve got some reputational stuff that they need to get past. They need to show the world what they can do. What an interesting place. 

Siya, I’m keen to hear, in your own words, the European theme at the moment and, of course, the extent to which this ETF is a nice pure way to play it.

Siyabulela Nomoyi: Sure, Ghost. Just talking about those sunglasses [laughing]. I’m giggling because I saw a picture first and I thought, “Ag, it’s one of these AI-edited videos…”

The Finance Ghost: [laughing] Nope! The real deal.

Siyabulela Nomoyi: Then I saw the video, and I was like, “What is happening?” [laughing]

The Finance Ghost: For a moment, I felt cool because I thought they were Ray-Bans, and I also love a pair of Ray-Bans aviators…

Siyabulela Nomoyi: Yeah, yeah [laughing].

The Finance Ghost: …and then I googled, and they were actually some other very larney, $800 jobbies which are definitely not like mine.

Siyabulela Nomoyi: Yup! [laughing]

The Finance Ghost: And…yeah. That share price actually popped, so there we have it, you know?

Siyabulela Nomoyi: Exactly.

The Finance Ghost: Throw The Intelligent Investor in the bin, like in that meme. Just go and buy whatever shades Macron is wearing. But anyway, such is life in 2026.

Siyabulela Nomoyi: [laughing] So, I’m quite excited about these two ETFs. As you mentioned, the Satrix MSCI Japan and the Satrix Stoxx Europe 600. 

I just want to quickly mention that Satrix is not just adding more global exposure for clients, but it is giving investors low-cost tools to actually make sure they can diversify their portfolios and use such ETFs to be essential building blocks for the investors’ overall investment portfolios. 

So, about what you were mentioning about the US, and what I’ve seen generally as well, is that, just thinking about global exposure as a conversation or looking at what it is out there, especially for SA investors, the first thing that comes to mind is… well, it’s an index like the MSCI World, which is a core index. 

But if you look at the holdings, you’ll notice that the index is largely dominated by the US – about 71% US on that index.

Don’t get me wrong, these US companies are massive multinational companies that pull their revenues across the globe, but the concentration risk there is that these indices actually are mostly skewed to the US policy exposure. 

Those companies are based in the US, so they’ll have to go along with whatever the policies are in the US.

So, just going back to your question about the Euro theme, the index composition and the opportunity that comes with the Satrix Stoxx Euro 600 – yes, it’s very broad, and it’s one of the most diversified developed market indices you’ll ever see, globally. So, definitely a mix of large-, mid- and small-caps in there. 

The opportunity in European (and also UK) equities today is that they offer something increasingly scarce in global portfolios: a different set of industries. Especially if you’re talking about global exposure, what it is right now, as I mentioned for SA investments. 

So, they offer a different economic engine and a different return profile as well from all these US-dominated global benchmarks. Which is why I wanted to talk about the MSCI World in the beginning. 

So with this ETF, investors get exposure across 17 European countries, including the UK – very important; you just mentioned that. 

And then, back to your point about switching back on its industrial base. These countries have world leaders in engineering, automation, and advanced manufacturing, which can benefit from reshoring and also from infrastructure investments. 

So, Ghost, at the same time, the region is at the centre of this green-energy transition, with significant investment flowing into renewables. 

There’s green infrastructure, electrification and climate-related industrial policies, so this creates a long-duration opportunity beyond, for instance, the tech-heavy narratives of the US markets. 

I’m not trying to diss the US markets, I’m just trying to paint a picture of what you get when you think about global exposure. 

Especially for SA investors. When they think about global exposure, they think about the MSCI World, but at the same time, the MSCI World is so concentrated in this one region. 

Bringing it back again to this index, the UK is about 20% of the index. So, investors also get an opportunity to actually get exposure in international banks, energy majors and many UK firms, but also earn revenues globally as well. 

With this fund, you get exposure to multiple economies, different policy and business cycles, exposure to strategically important industries, as well, for the next couple of decades, and a return profile that can have a very different payoff period compared to other regions. 

This is why I think it’s very, very important for clients to actually just have a look at this ETF – whether they want to be partaking in the IPO that is running right now or when the ETF is listed.

The Finance Ghost: I just want to give an example. And I know this is a single-stock example, which is obviously not super appropriate in ETF land, but just to give people an idea of what’s happening in Europe – let’s do Barclays, the bank. That share price, in the past year, is up 65%. 

Now, that’s in pounds. And if you’ve been watching currencies, yes, we keep talking about how the rand is doing well against the dollar. 

That’s got less to do with the rand and more to do with the dollar. Because if you go and look at it against some of the other currencies, yes, the rand has had a good time. But stuff like the pound has been a lot stronger, a lot steadier. 

So, Barclays up 65% in pounds. JP Morgan, probably – not ‘probably’, it’s the best of the American broader banks – up 17% in the past year. 

Now obviously we could go further back, etcetera, etcetera, but at the end of the day, you can’t roll back the clock and go and buy shares five years ago. You have to look at what’s happening in front of you, and then make decisions. 

And it’s just interesting, because the banks are one of the ways to see what’s actually going on in Europe and how sentiment has actually changed. And to your point, it’s 17 countries. So, people use the word ‘Europe’, but it’s a really big place, and it’s very different. 

I’ve been lucky enough to travel… I mean, I’ve essentially been to both ends, in some respects. I’ve been to the UK; I’ve been to Turkey. Both of those are essentially ‘part of Europe’, but they could not be more different if you tried. 

It’s like travelling from West Africa to South Africa. They might both be ‘Africa’, but that’s really where the similarities end. 

So, there is diversification there. And as you say, in the big global indices, because of what’s happened in Big Tech over the past 10 years, they have become very US-centric, so if you want to achieve true diversification, even if you have the MSCI World, you might want to seriously consider adding on other regional exposures. 

And that’s, of course, the joy of ETFs. You can use them as these ‘building blocks’. It’s building a big thing out of Lego (I think we’ve said that before). You pick the blocks you want. 

You can use, for example, MSCI World. Give yourself global equity exposure. But maybe it’s a bit too US-centric, so you add on some of this other stuff to get to the mix that you specifically want. 

And obviously, you can do that in your tax-free savings account, which is another benefit of ETFs that I always want to remind people of, because it really is a very big benefit. 

So, that gives us a nice sort of ‘lay of the land’ of why this thing is interesting, and how nice and different it is from the exposure that a lot of people have. 

You did mention that, in some respects, Europe has been a leader in certain areas. Renewable energy, absolutely. Another one that comes to mind for me is luxury goods. If you think LVMH, for example, lots of others – they tend to be listed in Europe. 

And then obviously, with global businesses, lots of exposure (ironically) through to China, there. So, those look-through exposures are present in the story. 

Any other sectors that you want to just lift the lid on as part of being quite prominent in this ETF? I mean, the other one in Europe that everyone’s been talking about is defence. That’s another big one that’s done really well. 

So, Siya, what are some of the sectors that just come through in this ETF?

Siyabulela Nomoyi: Yeah, quite right, Ghost. Europe is uniquely dominant in terms of consumer staples and luxury goods. It’s an area where the region has unmatched brand equity and pricing power. 

There’s quite a lot of brand heritage and craftsmanship there. Companies with over a century in the game. So, as you mentioned, LVMH. 

Think about Dior, Louis Vuitton and so on. L’Oréal. Kering (which owns Gucci), and so on. Luxury brands can raise prices without losing customers in the same way mass market retailers might. 

But Europe and the UK are also historically strong in financial services (you mentioned one of the banks), banking and insurance, to be exact. So, financials are consistently one of the largest sector exposures in the Stocks Europe 600 Index, which our ETF will track. 

In fact, right now, it’s about 25% of that index. I’m pretty sure anyone listening to this recording will know HSBC, BNP Paribas and so on. So, that’s quite a dominant sector in the index and, historically, those have been the biggest companies in that index. 

Industrials are huge in the index as well – the next biggest sector, at about 20%, with well-known names such as Siemens and Airbus, provides exposure to electrification, automation and aerospace manufacturing. Those are big names you can find in these sectors, as well.

And then the UK, in particular, adds depth in terms of energy and also natural resources – sectors where London-listed firms are actually global leaders. 

So, the Stoxx 600 index therefore really provides exposure to companies which are quite diversified in terms of where they pull revenues. You can think of Shell, BP, and diversified miners like Glencore, which are central players in global commodity and energy supply chains. 

I could go on, but another globally distinct European strength is in healthcare and pharmaceuticals. Europe has produced some of the biggest drug makers and healthcare innovators in the world, and healthcare is the third-largest sector in this fund, around 14%.

And then, just going back to your point when you were mentioning the different countries and areas, what I like about this index as well is that, outside the fact that you get these different sectors, there’s also the currency diversification as well. 

Because you’ll get around 60% just coming from the euro currency in the index. There’s also going to be 20% coming from the pound currency from this index, and then the rest of the currencies, like the Swiss franc. 

All of these currencies are actually feeding into the different layers of diversification in the index as well, which I really think is quite beneficial for investors.

The Finance Ghost: Siya, thanks. That gives us a really good idea of what’s going on in there. And what’s particularly interesting is to look at some of those big names. 

You’ve mentioned some of these sectors, so healthcare, very big in pharma, some big banks, and then technology (for all of the teasing that Europe gets). Unfortunately, they really do have only one brave soul waving the flag on top of the mountain, and that is ASML. 

For those who don’t know, ASML produces the extremely sophisticated machinery that manufactures chips. So, that’s why it has done well. 

If you want to go way up the value chain in AI land and you’re scared of saying, “Oh, I can’t choose between Google and Microsoft,” or, “I just don’t know how far Nvidia can go,” you can go up, up, up the value chain, to something like ASML, and say, “Well, that is literally the shovel in the gold rush.” 

Literally, in this case. It’s as high up the value chain as you can really go. Just another good example of how Europe is such a hotbed of R&D, actually. 

I’m not sure that they’re so great at taking risk and generating lots and lots of risk-taking companies that come through, but they’ve got some incredible R&D houses, and they’ve got some really good stuff that comes out of Europe. 

So again, diversification. That’s kind of the point. And that’s the thing I wanted to really point out. That the US is so tech-heavy, right? Whereas in Europe, you’re getting ASML, you’re getting SAP, further down. 

SAP is struggling. I think that’s going to drop out of the top 10. Software as a Service (SaaS), as a model, is taking serious strain. The Americans are not immune – Adobe is having a really bad time. So is Salesforce.

So, it’s good diversification from a sector perspective versus, for example, the S&P and especially the Nasdaq, right? 

Siyabulela Nomoyi: Yeah, definitely. When you think ‘Europe’, you definitely don’t think ‘AI’ or ‘tech’. Well, I certainly don’t. 

And, from this index, infotech is currently only about 25 companies in that index, out of 600. That only makes up 8% of the entire index, and half of that weight is actually on those two names you’ve mentioned. So, it’s not a lot, in terms of contribution to the overall index. 

And this is exactly what I was mentioning at the beginning of our conversation, where investors are thinking that they are globally diversified when they are actually more tech-heavy, US-domicile heavy, in terms of their exposure in the portfolios that they have. 

So, with this Stoxx Europe 600 ETF, and together with the Japan ETF as well, Satrix is really trying to complete the… I mean, that’s the ‘message’ – to actually try and complete the global exposure picture for clients, where clients can think of these ETFs as additional building blocks for creating a diversified overall portfolio.

This is exactly where the opportunity for diversification comes in, and I’m not only talking about regional exposure diversification. Remember that central banks may no longer move in lockstep. This means that clients can spread their risk to areas where there are different business cycles, different policies, different interest rate cycles and so on. 

So, the return payoffs can be quite different at different times, hence bringing in diversification for clients and better portfolio resilience. So, I like the fact that you can look at the US exposure and think software, think cloud and all those companies’ AI. At the same time, there are other regions where they play a massive role in different sectors as well.

What’s important when you look at these two ETFs is that you’re not really coming in and saying, “Okay, I’m replacing this exposure with this.” You’re really just trying to complement your exposure using these ETFs. 

So, when you look at the MSCI World, 71% of that index is the US, and then the next bit is Japan, which is around 5% or so. That just screams concentration to you. You need something to actually just try and complement that, to make sure that you are really diversified in terms of your global exposure. That’s where the original building blocks come in, really, for clients.

The Finance Ghost: Yeah, it’s kind of like a jigsaw puzzle, and these are the last few missing pieces, right? That’s probably the right way to think about it. Literally, as you say, completing that picture. I like that. 

Another important point, before we move on to the Japan ETF, is that a lot of South African investors bought the Top 40 last year and they are smiling. Well, depending exactly when you bought, but either way you’re smiling. It’s gold, it’s PGMs, it’s all of those things. 

But that’s the point – it’s all of those things. It’s very much resources. And again, you can go buy Satrix RESI ETF if you want to get a pure-play look at that, obviously. 

But a lot of South Africans are now sitting with this portfolio that is basically US tech and South African resources, right? If you’ve bought the Top 40 and you’ve gone and bought the Nasdaq over the years, that’s what you now have. 

So again, what’s nice with this European ETF is you’re not just getting diversification away from US tech, you’re also getting it away from South African resources.

It’s an uncertain world. No one’s quite sure what will happen. If you have a long-term view where you’re hoping to basically get rewarded by the market for taking a long-term view, then – and the fancy term for that is ‘getting paid for duration’ (if you read fancy financial writing), it basically just means that if you’re willing to hang around, the market should reward you. This is a nice way to help yourself hang around for a long time, but in different spaces, as opposed to being too concentrated.

So, that’s the last thing I wanted to ask about this. Basically, there are no resources? We won’t dive into painful pasts, but Europe is not famous for having lots of resources. That’s kind of why they went elsewhere, right?

Siyabulela Nomoyi: Absolutely, Ghost. The picture that you were trying to paint, in terms of infotech and AI. So, the infotech exposure from indices like the S&P 500 have more than doubled over the last three or four years. 

And then, if you come back locally, things like the JSE index harmonisation (which is a topic we’ve spoken to clients about in the last two to three years, as well), have also upped the gold exposure in standard indices, core local indices, as inward listed stocks got reduced from the index. 

Just remember, Richemont, for instance, was like 15% or so of the Top 40, back in 2021/2022, but now it’s below 3% of the index. Not just price action, but the way that the index is constructed. 

And the biggest resource stocks now are gold in these local indices, because of that and also just the price action from the last couple of years. So, definitely, anyone who has been holding local indices has collected a high exposure to these sectors over the years from the JSE reform and also just the strong performance, as well, from these counters. 

But in the Satrix Stoxx 600 ETF, there really isn’t much in terms of materials. There’s just about 5% or so weight, and that weight is really spread out through 50 counters. So again, you get different cycle exposure from this fund versus what you currently see on offer.

So it really works well as a complement to what is out there in our suite of products and definitely not a replacement.

The Finance Ghost: Fantastic. I think let’s call it there on Europe. And now, we can put our money on an aeroplane and fly across to a place that I really want to travel to, which is Japan. 

Firmly on my list. Very hard to get all the way out there when you have young kids. You need to rely on a serious support system, because you can’t go to Japan for three days. So, maybe I’ll have to wait a long time to go to Japan, but beautiful place – everyone who’s travelled there whom I’ve spoken to absolutely loves it. They describe it as a life-changing experience.

Will your money have a life-changing experience? I’m not sure. But that’s why we’re going to talk about the Satrix MSCI Japan ETF. 

And, aside from how beautiful the place is and how interesting the culture is, it’s also a pretty fascinating macroeconomic and geopolitical story. 

They have their first female Prime Minister. They are, as I understand it, heading to elections soon. There’s a lot of focus on stimulus, on bond yields, on currency pressures and the weakening yen, but also what this means for the exporters in the market. 

And underneath all this, my understanding is that Japan is the third-largest stock market in the world. So, that is incredibly interesting. 

Siya, as I did with Europe, I’m just going to open the floor to you, here, to just give us some of the key features of the Japanese story and this market.

Siyabulela Nomoyi: Yeah. Geez, Ghost. I mean, every second person I speak to wants to travel to Japan – including me. I…

The Finance Ghost: The yen needs to get weaker and weaker, then they need to somehow bring the country closer, and then we can all do it!

Siyabulela Nomoyi: Yeah, exactly [laughing]. Yeah. It is a long flight.

The Finance Ghost: It is, sadly, very far away.

Siyabulela Nomoyi: Yeah. But it always feels like to me, if I get there, it will feel like I’m actually stepping into another realm or something totally different.

The Finance Ghost: Basically, yeah.

Siyabulela Nomoyi: Quite exciting. But, as you correctly pointed out, Japan is the third-largest equity market in the world, behind the New York Stock Exchange and the Nasdaq. 

Just thinking about that for a second, in terms of global exposure – again, let me just go back to the MSCI World example. Japan is about 5% of that, but it’s the third-largest equity market in the world, and it’s the second-biggest region in that index. 

And I keep repeating this when I speak about Japan to colleagues, or to media or friends, but what we’re talking about here is really the cornerstone of Asian markets. A totally different space altogether. 

Very physical exposure, different from cloud or software exposures, and so on, from the US and other areas as well, and also pharmaceutics and financials from Europe and the UK. So, totally different from that. 

A colleague of mine said, “With all the AI boom and developments, we still leave the office, and someone is going to hop into a Toyota and drive home – for many years.” And that’s Japan. 

Globally competitive sectors with advanced robotic exposures, automation and precision engineering. Japan goes hand in hand with those sectors. 

So, the opportunity in Japanese equities today is increasingly being driven by a combination of structural reforms you mentioned  – so, changing corporate behaviour and a very different economic and policy cycle there. Japan now offers investors exposure to a market with unique sector leadership, improving shareholder returns, and a reform agenda that is reshaping the way companies are actually deploying capital.

So, a little less cash hoarding versus the past. Making sure that the shareholders actually participate in the growth of the companies that they are invested in. 

One of the most important developments has been Japan’s new focus on stimulus and economic revitalisation, alongside efforts to actually break the country out of decades of stagnant pricing dynamics. 

Inflation has returned modestly, wages are rising, and policymakers have been encouraging domestic demand and investment, which is very important for the equity cycle that we can witness there. 

The shift matters because Japan’s equity market has historically been constrained by a deflationary mindset, and the move towards a more normal economic environment is supportive of corporate earnings and market confidence as well. 

Also important, Ghost, is that, in the happenings in Japan, the exchange has been pushing companies back (particularly those trading below book value), to actually improve profitability and capital efficiency. As I said, less cash hoarding.

Share buybacks and dividend increases have become more common, and companies are increasingly being judged on Return on Equity (ROE) and shareholder alignment. So, those are really important. 

Companies have to look at that on their reports and what they bring to shareholders. This then creates the potential for a gradual re-rating of Japanese equities as corporate Japan becomes more shareholder friendly. 

And then lastly, I think you can see the potential – even from returns from last year or the last couple of years for comparison. If you look at the MSCI World, for instance. Since 1994, (almost 30 years ago), the MSCI World return, in dollars, is about 9% per year, if you’re looking at that period, while the Japanese stock market is only at 3%. Big difference. 

But in the last three years, these two indices have actually been on par, not very far from each other (even though the MSCI World has outperformed). And last year, the Japanese market was up 30-odd% versus 20% from the MSCI World in dollars. 

So, something is coming out of the mist, years in the making, and I think it’s quite a positive outlook for the market.

The Finance Ghost: Yeah, it’s a cautionary tale about the birth rate, something I write about pretty often, because one of the most amazing statistics about Japan is that they sell more adult diapers there than child diapers, which is incredible. 

That tells you how old the population is. So, cautionary tale there, and a very interesting point. 

Something else I want to raise about Japan, Siya, is that none other than Warren Buffett has had some very nice things to say about Berkshire Hathaway’s holdings in some of what he calls the ‘Japanese trading houses’. 

He talks about how he plans to hold those shares essentially forever, decades on end. Which is interesting because a couple of decades ago, he called Japan ‘uninvestable’. So, things do change. That is a reality, and it’s quite fun to see this coming through. 

Another really big difference to that Europe ETF that we talked about is that my understanding is that this index in Japan has around 180 constituents – nowhere near the 600 in Europe, and it’s very much focused on large- and mid-caps. 

Just to give you an idea of the depth of that market, if you buy the Japan All Cap Index (and to be clear, that’s not what this is tracking), that is over 3,000 constituents. Imagine! That’s like 10 times the number of stocks we have on the JSE. 

I’m very glad I’m not trying to do Ghost Mail in Japan because I struggle to write Ghost Bites every day as it is. I’m not sure that I could cope with 10 times the updates, Siya. 

But 180 in this index tells you it’s large in mid-caps, actually, so quite a different risk profile to the much broader index in Europe, right?

Siyabulela Nomoyi: Yeah, of course. It’s a huge market. No wonder it’s the third-biggest in the world. So the MSCI Japan Index (which this ETF will track) is quite well spread out as well (which I like), in terms of the concentration risk that one can look at when they think about index trackers. 

As you mentioned, about 180 stocks, large- and mid-cap segment of the Japanese equity market. That actually covers about 85% of the entire market with just those 180 stocks. So, you’re getting almost a full exposure of what’s happening in the Japanese equity market. 

These are household brand names like Toyota, Honda, Panasonic, Nintendo, Sony, and so on – everyone knows those names. They form part of that index, with the biggest position (which is Toyota) being around 4.5%. Very low concentration in that index. 

So, those 180 stocks are really spread out nicely, from Toyota and so on to the smallest holding there. The MSCI Japan Index is one of the most widely used benchmarks for exposure in the Japanese stock market. 

For South African investors, the composition of the index is particularly relevant because it offers a complementary blend of sector exposures and return drivers that can actually broaden offshore portfolios beyond the traditional core global exposure that we spoke of. 

And industrials, consumer discretionaries, some financials and also some tech hardware sectors are what dominate this index. It reflects Japan’s big role as a global leader in transport, high-end engineering and manufacturing. 

This really gives investors exposure to the real economy side of innovation. There’s innovation and the software and all those things, but you really get the real economy exposure from this index. 

So, the MSCI Japan Index is also a meaningful complement to South Africa’s local equity benchmark, such as the FTSE/JSE All Share index, offering very low correlation levels between the two over many, many years of comparative returns.

The Finance Ghost: Here are some other stats that I’ll hit you with around Japan, just because I find the place so interesting.

There are around 120 million people (roughly) in Japan. There are a few different stats that I’m finding here, but that seems to be the number. That’s about… what? That’s double…no, it’s about triple – we don’t really know how many people are in South Africa, but it’s a lot bigger than us, that’s for sure. 

What is interesting, though, is that recently the population drop has been the steepest in any given year since data collection began in 1968. So, this ageing population story is actually essentially getting worse for them, not better. 

And that’s why they’re trying to stimulate this economy, because it’s actually a bit of a ticking time bomb in that regard. But that stimulation can really help, from an investment perspective.

I’ll give you another interesting stat, bearing in mind this is a shrinking population. 

In 2025 – I found an article that talks about new car sales in Japan, that’s a really nice barometer for consumer discretionary spending and how people are feeling (especially because Japanese cars last forever, so you don’t really need to replace your car, let’s be honest) – so, sales across all brands: up 3.3% year-on-year. That is meaningful in a country that has negative population growth and a whole lot of people who are way too old to drive. That is very interesting. 

Kudos, Toyota. Good results there. Ag shamepies for Nissan. They just can’t catch a break. Down 15% in their home country, alas. But again, ETFs give you broad exposure so you don’t have to be hurt by the performance of one company like Nissan. 

The point is that the stimulus (I’m starting to see it there, you know) comes through in stats like that. And that obviously makes it pretty interesting from an investment perspective. And, as you say, lots of manufacturing precision, etcetera, going on there. 

For those who are thinking, “Okay, well, how does this work from an AI long-term perspective?” I guess the answer would probably be the amount of AI that is embedded in these manufacturing processes and how much slicker they can become. 

Or is there more to the story than that, in terms of the technology stocks in Japan?

And before you answer that piece Siya, the other point I just want to raise is the currency.

We find ourselves in this odd situation, right? Where suddenly, the rand is strengthening. We don’t know this life, as South Africans. We only know a rand that goes down. But the rand is strengthening and the yen is struggling. 

So, interestingly enough, this is almost like flipping the script a little bit. Suddenly, we get to behave like the developed market (even though we obviously aren’t, compared to Japan), because the yen weakening over time is a source of potential return – assuming it carries on. Let’s not pretend like currency situations don’t change. 

But if that carries on, that’s a source of return for South African investors. And then in theory, you get all this other cool stuff you’ve talked about, like manufacturing and what you’ll tell us shortly about how AI plays in that market, etcetera.

Siyabulela Nomoyi: Yeah. So Ghost, I think you might want to check those flights, in terms of the rand strength versus the yen and the dollar. It might be a good chance to have flight tickets which have dropped quite a lot there, but…

The Finance Ghost: It’s the small humans keeping me out of Japan, not the yen, I’ve got to tell you.

Siyabulela Nomoyi: [laughing] Yeah. So, looking at the strength there, the last time I checked we were about 15% or so strength from the rand against the yen and the dollar as well. It’s been sort of the same direction. So, incredible times. 

But that’s the advantage when you get a locally listed ETF which is traded in rands, there’s that currency diversification. And I spoke about that in the euro as well, where you get these different currencies from the 17 European regions vs. the UK as well.

You also have the yen which has been seen as sort of like a defensive position, in terms of the currency exposure that you get there. So, it’s a major advantage for South Africans if they move their money to a currency which has been a lot weaker when compared to the rand as well. So, if that actually turns around, that’s also adding to the return for clients.

But Ghost, what I’ve also seen (and I don’t know if anyone will agree with me here) is that, while the US has sort of led the boom on AI software and cloud ecosystems and so on, Japan has been a bit misunderstood here, because they’re very important on the physical and industrial part of this entire revolution. 

It’s not like they’ve been left out or so, but they’ve played a big role in terms of the physical part. As I mentioned, this is the real economy that you get when you get exposure to this index (the MSCI Japan index). 

So the precision engineering I mentioned, robotics, factory automations, advanced manufacturing and high-end electronics, they have applied AI in these industries almost better than anywhere. 

A prime example would be their bullet trains. They’re the pioneers in the space, starting off in the ’60s. But that industry, because of AI… the maintenance of their reputation for extreme safety, being punctual (I mean, those guys will send out an apology to commuters just for being late by two seconds, so punctuality is very important), and a very, very efficient system, even in a very high-frequency network. That can’t be just a person sitting and maintaining that. They’ve used AI very strongly in that area and also in other areas as well, in terms of the automation and the building of factories as well.

In Japan, because of the ageing population that you’ve mentioned, labour shortages and having to actually increase productivity, AI is not just a tech train; it’s actually an economic boom in the area. 

So the tech companies like FANUC and Keyence, who operate in automation systems, are already leveraging a lot of the AI and will stand to benefit from it for years to come, actually. 

And semiconductor companies, as well. Advantest and SCREEN and all these electronic companies like Sony, Canon for images – all these contribute meaningfully to tech and also leverage a lot from the AI.

The Finance Ghost: Yeah, it’s a fascinating space, and it’s amazing how these technological advances filter all the way down.

Siya, I think we’ve done a great job here of just piquing people’s interest around both Europe and Japan. And as always, we’ve given it a balanced look. It’s not to say, “Oh, you know, here’s a brand-new ETF, go buy it, everyone. It’s guaranteed to go up.” You’ll never hear that on anything that comes out of Ghost Mail or Satrix. 

It’s more to say, “Here are some options, here are some more building blocks for your portfolio. Think about them, do the research, consider how they fit in, as always.”

One cool thing is you can do it in your tax-free savings account. That’s a point that I’ll always drive home. And you need to go and understand the huge geopolitical forces at play behind these regions. 

Because that’s the one thing: when you go and buy a regional ETF, you aren’t buying one company story. You’re kind of not even buying 10 or 20 company stories. You’re really buying a macro story. 

And you need to understand that and go and do the work. And if you do understand that and you get the timing right, you can actually get incredible risk-adjusted returns in your portfolio. 

So, to our listeners, go and check them out. I’ll obviously include links to stuff like the fact sheets and that kind of thing. These are fresh-out-of-the-oven ETFs available on the JSE.

And Siya, to you and the team at Satrix, congrats and well done on continuing to bring these cool innovations to the South African market. I look forward to lots more of them this year. I’m sure you’ve got more planned.

Siyabulela Nomoyi: Yes, definitely. Ghost, thank you for the invite. And for the listeners, I think it’s very important that they also understand that there are local providers who have products in the space as well in the JSE, but I think with our offering, there’s quite a huge cost benefit. 

The Euro Stoxx ETF will come in at 25 basis points, and the Japanese one will come in at 35 basis points. So it’s quite…

The Finance Ghost: It’s amazing, actually. 

Siyabulela Nomoyi: Yeah, it’s very, very advantageous for clients out there. So, thank you very much, and all the best.

The Finance Ghost: Yeah, it’s a pleasure. It’s amazing to think you can get that kind of offshore exposure at that sort of basis points. So, well done. 

And of course, available on the SatrixNOW platform as well, for those who use that. Siya, thank you and cheers.

Siyabulela Nomoyi: Thanks, man.

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