The Japanese stock market was down again on Thursday, carrying forward the sell-off trend that started last week. The Nikkei 225-share index was down 5.2 percent to 13,589.03 points, which is the lowest since late April. The index has declined by more than 16 percent after hitting the peak 16000 mark last week, says a report from NYTimes.
Fall is natural
One of the government spokesman said it is natural and normal for the share prices to “undergo corrections even as they rise.” The index has risen “extraordinarily fast” in the past few months, helped by Prime Minister Shinzo Abe’s efforts to bring the economy back on the growth track. “… it would be unnatural if adjustments did not occur,” he added.
Reasons of Nikkei’s Fall
Between mid-November and mid-May, Nikkei has gained more than 80 percent but fell 7.3 percent last Thursday. The market has been volatile ever since, fuelled by expectations that U.S. Federal Reserve may start to scale back the stimulus efforts. The other factors contributing to the fall include higher bond yields in Japan, recent end of a slide in the yen and weak manufacturing numbers from China.
The fall in the Japanese index did have some contagious effects on other Asian markets, though they were not so sharp. Markets in Singapore and Taiwan lost 1 percent while Australia’s S.&P./ASX 200 lost 0.9 percent. Hang Seng Index of Hong Kong fell 0.3 percent.
Yesterday, Britain’s FTSE 100 also lost 2 percent, but the index stabilized this morning, in the early trade. Also, 30-stock Dow Jones Industrial Average lost 106.59 points, or 0.7 percent, yesterday.
Question raised on “Abenomics”
Though there are no clear reasons for the fall in the Japanese market, it does raises questions on Mr. Abe’s bold economic policies. With a sharp fall in the markets and spike in long-term interest rates, critics are quick to point the in-efficiency of Mr. Abe’s monetary and fiscal push.
One of the critics of Mr. Abe’s economic policies, Ryutaro Kono, who is also the chief economist for Japan at BNP Paribas said “The falling share prices point to the dangers that are inherent in Abenomics.”
Since Mr Abe took over the office in December, Bank of Japan has introduced a number of stimulus measures, including an assurance to push about $1.4 trillion into the economy in less than two years.
The data, due on Friday, will be closely monitored by authorities and skeptics, for any signs of failure or success of Mr. Abe’s policies. The Friday data will include the industrial output, which will through light on the deflation conditions.