Share prices in Japan have sharply come down in the aftermath of the yen hitting a 10 week high against U.S. dollars.
Th 225 index declined 6.5 percent on Thursday. The recent decline has brought the market into the bear region. The index falls into bear region normally when it declines 20 percent from its recent high.
Investment strategies used by hedge funds have evolved over the years, although the biggest changes have come in the use of computers to develop portfolios. Rosetta Analytics is a woman-founded and woman-led CTA that's pioneering the use of artificial intelligence and deep reinforcement learning to build and manage alternative investment strategies for institutional and private Read More
Investors Depressed By Decision Of The Bank of Japan
The index reached its 5.5 year high in May and since then has declined 22 percent. Investors have been depressed by a decision of the Bank of Japan in which it announced that the stimulus program will not be further continued.
There have been doubts whether policy moves by the government of Japan will enhance the recovery of world’s third largest economy for the long term.
According to analysts, investors are more concerned about the volatility in the value of the yen rather than the policies.
The escalating yen is affecting exporters’ profits. Due to an aggressive yen, exporter profits are eaten down when they repatriate their earnings home.
The value of the yen increased to 94.06 against U.S. dollars in Asian trade. This has been the highest level of increase since April 4.
The Japanese currency has been declining over the past few months, primarily affected by policies that were brought out by the policymakers to enhance growth of the economy.
The policies incorporate measures that the central bank has decided to follow in order to increase the money supply of the country by two times. The yen declined approximately 30 percent against the US dollar between November and May.
The profits of the major exporters increased after the yen started declining. The stock market also shot up.
Over the past few weeks, the Japanese currency has become stronger and has increased over 8 percent against the US dollar since May 22.
“Whether the yen’s strength will persist or not is a key,” said Hiroyuki Fukunaga, chief executive of Investrust.
Other Asian Markets Also Down
A decline was seen in the other stock markets of Asia, as well, primarily coming down due to the confusion over the effect of the United States Federal Reserve stopping the stimulus.
The Shanghai Composite Index of China declined 3.1 percent, Hang Seng of Hong Kong declined 2.7 percent and Kospi was down 1.4 percent.
There are strong expectations that the U.S. Federal Reserve will stop the quantitative easing program.