The restart of shuttered Japanese nukes breathes life into a moribund global uranium market.
A left-for-dead global uranium market is showing major signs of life in the wake of Japan’s decision last week to begin firing up some of its electro-nuclear power plants. They were shut in the wake of the tragic Fukushima atomic disaster caused by the devastating March 2011 earthquake and tsunami.
For intrepid alpha-seeking investors, an efficient exchange-traded fund tracking an index of uranium miners from around the world is available to capture this shift of fortune for uranium. The Global X Uranium ETF (URA | D-96) has jumped almost 25 percent since Japan announced it plans to fire up nuclear reactors to soften the blow of relying almost entirely on imported fossil fuel for electricity generation.
“For a uranium market that was left for dead, well, it doesn’t take much to revive it,” said Dennis Hudachek a senior analyst at ETF.com. “Abe has pretty much gotten his way on all the other things he’s pursued, and it looks to me like he’ll get his way on this.”
Hudachek was referring to Japanese Prime Minister Shinzo Abe’s so-called Abenomics, an economic revival program for a Japanese economy struggling with deflationary pressure since a real estate bubble in the world’s No. 2 economy popped in the early 1990s. Abe is seeking to weaken the yen, stimulate exports and lift tax revenues, and, as Hudachek said, Abe so far has political winds at his back.
For the record, URA and the Market Vectors Uranium + Nuclear Energy ETF (NLR | C-20) are not at all the same fund, though investors can be forgiven for thinking they might be. URA is a collection of uranium-mining companies from around the world, making the ETF a fine proxy for uranium prices. But NLR is a utility play—albeit it with a nuclear twist.
The chart below tells the tale well: NLR behaves a lot more like the broad market than does URA. URA is depicted in red, reliably reflecting uranium market volatility.
Chart courtesy of StockCharts.com