While the Tokyo market is closed, U.S.-listed Japan equity ETFs continue trading in the U.S. market, with prices fluctuating based on the yen exchange rate, Japan equity futures and overseas market movements. New information may be reflected around the reopening of the Tokyo market, potentially restarting price discovery.
U.S.-listed Japan equity ETFs continue trading in the U.S. market even while cash trading on the Tokyo Stock Exchange is closed. While cash trading in the underlying Japanese stocks is suspended, ETF prices may fluctuate under the influence of the yen exchange rate, Japan equity futures, overseas markets and new information.
ETFs trade independently of the cash shares in their holdings and can move based on an estimated value different from the Tokyo market's closing price. Premiums and discounts to NAV may partly reflect Japanese stock prices while the Tokyo market is closed.
When the Tokyo market reopens, Japan's equity market gets its first opportunity to absorb information processed by other markets. ETFs, meanwhile, may update their prices before and around the reopening through factors including the yen, futures, overseas markets and new information.
Currency-hedged and unhedged ETFs may behave differently because they handle currency movements differently. Even after Tokyo reopens, ETFs continue reflecting new information and may at times serve as the main venue for price discovery.
In conclusion, international ETFs link markets operating on different time frames, and continued price formation while the Tokyo market is closed may affect movements when the next cash market reopens.