Stock Investors Pull Out of Japan ETF After Virus Spreads

(Bloomberg) -- Investors are fleeing an exchange-traded fund tracking Japanese stocks on concern that the coronavirus will further damp economic growth if it gains a foothold in the country.

JPMorgan BetaBuilders Japan ETF lost $315 million Wednesday, the biggest one-day outflow since its inception in June 2018, according to data compiled by Bloomberg. JPMorgan Chase & Co. holds about 90% of the $4 billion fund, known by the ticker BBJP, so it was likely the culprit behind the withdrawal.

Japan’s economy is teetering toward a recession now, with economists estimating gross domestic product shrank an annualized 4% in the more recent quarter. In addition, the country reported its first death from the coronavirus Thursday, sparking worries that the illness could spread. One of Prime Minister Shinzo Abe’s advisers said earlier this week that the coronavirus “could be a significant drag for Japan’s economy.”

“Japan is certainly dependent -- especially the automobile sectors -- on growth in China, on Chinese demand, and that’s a sector that’s been hit hard,” said Chris Gaffney, president of world markets at TIAA. “That would justify some of those outflows.”

JPMorgan’s press office declined to comment on whether it was behind this week’s withdrawal from BBJP.

Following are the fund’s biggest holdings as of Feb. 12:

To contact the reporter on this story: Claire Ballentine in New York at cballentine@bloomberg.net

To contact the editors responsible for this story: Jeremy Herron at jherron8@bloomberg.net, Brendan Walsh, Randall Jensen

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