2024-08-06 07:26:01
The Tokyo Stock Exchange closed this Tuesday, August 6 with a recovery of 10.2% after having fallen by 12.4% the day before, the biggest drop in points in its history. The reason for this violent reform is the first signs of a slowdown in the American economy and a sudden increase in the yen under the influence of the result of the psychological movement called “carrying trade” on the Japanese currency.
Published on: 06/08/2024 – 09:26Modified on: 06/08/2024 – 09:52
2 minutes
With our correspondent in Tokyo, Frederic Charles
It’s the analysts Tokyo consider this overreaction of the Bourse Japanese but fear that it will deter Japanese citizens from putting part of their savings into the Japanese stock market. In about twenty minutes this Monday, the Tokyo Stock Exchange experienced a “black Monday”, the worst period (-12%) since the crash of 1987.
In July, the Tokyo Stock Exchange reached the highest level in its history at 42,000 points. Japanese companies posted record profits for the third year in a row. It took 34 years after the bursting of the financial and real estate bubbles to return to and surpass its 1989 peak.
The Tokyo Stock Exchange has been hit by rising interest rates in Japan after years of negative rates, according to Smarkarma analysts who specialize in Asian equity research. This caused the yen to rise.
This move is harmful to Japan’s major exporters who have benefited from the fall of the Japanese currency. Some analysts in Tokyo wonder if Japanese families who have opened special savings accounts called “NISA” and put part of their savings into Japanese and American stocks will turn away from the stock market again. Only 12% of Japanese household savings are invested in the stock market.
Them Tokyo Stock Exchange should overcome the biggest slump in its history. The profits of Japanese companies are improving. The latter dominate, like Advantest, testing technologies for electronic components. Large groups agree to sell unprofitable services, notes Edward Bourlet, an analyst at CLSA bank in Tokyo. There is an increase in mergers and acquisitions activities.
Japan also benefits from tensions between the United States and China. Big investment banks are moving money back to Japan as are Chinese investors.
Unexpected return in Asia
After the fall, recovery: Asian stock markets are recovering after experiencing a dark Monday yesterday. After falling 12%, Tokyo is experiencing a remarkable recovery. Spurred by fears of a recession in the United States, stock markets around the world followed suit. This recovery gives hope that this Monday’s crash is only temporary. Differences from Japan offer the most hope. The flagship index of the Tokyo Stock Exchange, the Nikkei, has already gained 10%. All Asian markets follow the Japanese movement. Most affected this Monday, Taiwan stabilizes and South Korea climbs without returning to pre-fall levels.
In Europe, the main stock exchanges lost an average of 2% of their value from the opening. In Frankfurt, Paris and London, all indicators are green. This unexpected return confirms the hypothesis of a panic movement, as explained by the economist Nicolas Véron. Investors are very angry, afraid of the idea of a US recession.
All eyes are now on America. On Wall Street, it was mainly technology stocks that took a nosedive this Monday. NASDAQ, the private index, lost 3.5%. This reduction started last week. It remains to be seen whether the Japanese hope can stop its fall.
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