ETF Expert

There are many times when commentators bash Japanese equities. After all, the Nikkei benchmark has been a losing proposition for buy-n-holders over the past 20 years.

Yet there are few times when you’ll hear anybody question the resolve of Japanese people. Japan was the world’s first modern superpower in the Far East. Even after losing its control in the region during World War II, the country rebuilt itself into the 2nd largest global economy. Its “total quality” management style and “just-in-time” manufacturing became the envy of the world in the late 80s; its corporate emphasis on quality set new standards for 21st century technology; lifetime employment is a reciprocal understanding between corporate officers and loyal employees.

Still, investing in Japanese companies has rarely been rewarding. Japan is an export-dependent nation with a strong currency — a mix that isn’t favorable to the bottom line of many export-dependent corporations.

In order to rebuild, however, there will be a massive wave of both corporate spending and government spending. The Japanese people simply won’t be deterred from the pursuit.

It follows that Japan’s going to be importing a whole lot of stuff in the coming months. The triumvirate of wood, coal and steel should have undeniable appeal, regardless of possible stockpiling in China.

The Claymore Global Timber Fund (CUT) tracks the performance of 27 companies in the Clear Global Timber Index. Corporations include those that harvest timber for commercial use, sell wood-based products and/or own or lease forested land. In the two days since news of the Japanese earthquake hit the wires, CUT has gained 1.0%.

Market Vectors Steel (SLX) tracks the price and yield of the NYSE Arca Steel Index. It exposes investors to global companies involved in the extraction of iron ore, the fabrication of steel products and/or the operation of mills. In the two days since news of the Japanese earthquake hit, SLX has gained 3.1%.

Market Vectors Coal (KOL) seeks to replicate the price and yield performance of the Stowe Coal Index — an index that provides exposure to companies deriving more than 50% of revenue from the coal industry. For Japan to generate electricity in its plants, the country will require cost-effective fuel a la coal. What’s more, coal becomes even more attractive when other fossil fuels move higher. In the two days since news of the Japanese earthquake, SLX has gained 4.1%.

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