Japan faces the risk of economic stagnation as panic has gripped the Tokyo stock market, triggered by economic uncertainty and the Bank of Japan’s surprise interest rate hike amid weak private spending.
The Nikkei stock index plunged more than 2,000 issues less than an hour after trading began at 9 a. m. on Friday, with investor sentiment weakened by concerns of a United States recession after knowledge economies were weaker than expected.
This is the biggest drop in Nikkei emissions since Oct. 20, 1987, when the benchmark index plunged by 3,836 issues following the Black Monday market crash.
Stocks extended their slide from the previous day, when a sell-off sparked due to considerations about the profits of Japanese corporate customers due to a stronger yen, which is cutting into the profits of automakers and other exporters once repatriated.
The Japanese currency has risen since the Bank of Japan raised interest rates on Wednesday, and Governor Kazuo Ueda signaled that the central bank could raise rates again this year, at a time when the US Federal Reserve appears be on track to cut rates in September.
The yen has risen more than 10% against the US dollar since July 11, when it was in the 161 range and the Nikkei posted a new record above the 42,000 line. The Japanese currency strengthened to the 146 zone in New York trading.
“An increasing number of investors are likely to be wary of their investments in Japanese stocks,” said an official at a European asset monitoring firm.
Inbound tourism, which has reached record levels due to the depreciation of the yen, could also be negatively affected if the currency continues to rise.
Ueda said at a news conference on Wednesday that “further adjustment of short-term interest rates” may occur only if efforts to achieve sustainable inflation progress as planned.
While a stronger yen will keep the costs of imports, such as food and energy, low and ease the burden on households, it could also deal a severe blow to spending, as equity holders see the price of their monetary assets fall. .
Private consumption, which accounts for about a share of Japan’s genuine gross domestic product, declined for four consecutive quarters in the January-March period. Economic stagnation may be true if the trend continues.
Although Ueda dismissed concerns about the potential negative effects of emerging market rates, he likely anticipated the massive stock market sell-off for two days in a row.
Takahide Kiuchi, an executive economist at the Nomura Research Institute and a former member of the Bank of Japan’s policy board, has forecast a rate hike in December. However, he added that such a move could be postponed until next year if stocks continue to fall or the yen appreciates rapidly.
At the same time, the economic recovery plan drawn up this autumn through the government and the ruling Liberal Democratic Party may be large-scale to deal with the dubious economic outlook.
“If the economy stalls, the concept that raising rates is the catalyst will gain traction within the government and the ruling party, making complaints against the Bank of Japan inevitable,” a senior government official said.
And neither does the manipulation currently.
Japan faces the risk of economic stagnation as panic gripped the Tokyo stock market, sparked by economic uncertainty and a surprise interest rate hike by the Bank of Japan amid low personal spending.
Wages and the hard-working economy have been stagnant for 30 years, even with record levels of the Nikkei and quantitative easing, the simple printing of cash that supports giant asset holders.
But today, the Bank of Japan says to be concerned.
There is a two-speed economy in Japan
These articles are written as if the strengthening of the yen is a bad thing. For example, corporations not making record profits is a bad thing.
Perhaps the yen will return to the general levels of €1=¥100
Then JT will tell us how bad it will be for overtourism, that imported goods are once again available to locals, and how the Japanese will ruthlessly spend the money they earned overseas, instead of overhyped and hyped deals in Okinawa, etc.
What does “stock declines” have to do with economic stagnation? That’s right, nothing.
DanteKHAHoy 5:04 p. m. JST
These articles are written as if the strengthening of the yen is a bad thing. For example, corporations making record profits is a bad thing.
Perhaps the yen will return to the general levels of €1=¥100
Then JT will tell us how this will be very bad for overtourism, for imported goods to become available to locals again, and how the Japanese will mercilessly spend the money they honestly earned abroad.
. No matter how newsworthy the websites are, the media will keep track of the negative problems of clicks. Just look at the weakness of the yen and all the terrible disorders it has caused here. Rice shortages (apparently) due to tourism (apparently) waste disorders (apparently) very expensive imports. Let’s move to a strong yen, profits will be affected, bonuses will be reduced, consumers will spend less because bonuses have been cut, Toyota and others will squeeze subcontractors because of the strong yen. Hotels are feeling the pressure of tourists who prevent them from coming. To me, it turns out it’s just noise! A weak yen for the tourism industry and fair for Toyota, but bad for imports. So, it’s terrible for tourism still. smart for consumers. Now just noise.
Also, the stock market is not the supermarket. And if you invest in the stock market, you shouldn’t be withdrawing your cash for at least 40 years. Just noise. No one lost money until they sold and cashed out to secure the losses. Immediately. Everything is for sale.
The basic bad things that hurt Japan: an aging population, a low birth rate, atrocious investments in education, a hierarchical workplace, ignorant politicians, low wages, crowded cities, hostile neighbors, weak foreign diplomacy, etc.
These are disorders that may not go away anytime soon.
Stagnation? This would be a great deal of luck for an economy that has been in decline for decades.
I don’t know anything about stocks, but can anyone tell me what’s wrong with “panic selling”?If stocks are going badly, will you actually hold them or take the opportunity to buy more?
I don’t understand.
Instead of raising interest rates and hurting almost every single industry, why not work to raise people’s wages so they can fall in line with the rest of the G7 countries?
Workers cannot be made to raise wages, so the LDP and BOJ are interfering in interest rates that are causing even more harm to everyone, employers and workers.
@kurisupisu
In addition to omitting the embarrassing gender gap, you succeeded perfectly. All of those points amount to being on the left compared to the rest of the industrialized world.
The Japanese government has wasted yen after yen to prevent the yen from plummeting over the past year and not to raise the interest rate to the current 1%. If they had done it sooner, they may have used all that cash for seniors. many of whom are now homeless.
I’m one of the lucky ones who doesn’t make minimum wage and lives comfortably in Japan. The Japanese government wants to raise the minimum wage to 1,500 yen an hour so that other people can do so and not become homeless. I see it in Yoloda, where they look for other people to clean planes, and they have to pay them 1,200 yen an hour, a shameful salary for cleaning dirty planes.
Stagnation is smart for Japan. The population is declining, so it is unrealistic to think that the economy will grow. It is natural that it decreases. So stagnation? Yes, bring it!
Economic fitness is what matters. And this can be measured only through GDP growth.
While a stronger yen will keep the costs of imports, such as food and energy, low and ease the burden on households, it could also deal a blow to spending, as those who hold shares see the price of their monetary assets fall.
This doesn’t seem to be a bad deal for the country in these difficult times, especially for those who are struggling.
We are going back to the same old pre-Covid economic climate.
A weak yen does more harm than good. A strong yen brings our wages closer to those of other developed countries and makes life less expensive for the average family. A weak yen only benefits trading and exporting corporations and we pay even more for everything. And a few fewer tourists due to the strong yen will face the dilemma of overtourism. The yen goes back to 110 and gets my support!
The sell-off was driven by considerations about the profits of Japanese client companies due to a stronger yen, which is squeezing profits from automakers and other exporters on repatriation. The Japanese currency has risen since the Bank of Japan raised interest rates on Wednesday.
The yen has just returned to its point of a few months ago and is far from its long-term overall average of around 120 yen to the dollar.
Unfortunately, local industry has been hollowed out since the late 1980s and the economy needs 150 people or fewer to drive export-led growth, similar to what happened in the 1950s, this time through weak firms.
The timing of the interest rate hike is not very opportune.
The yen had weakened, but most of the companies indexed on the Tokyo Stock Exchange were increasing their profits, and not only tourism companies but also export-related companies were doing well, so it was like pouring cold water on them.
If companies do well, workers’ wages will increase.
With a strong yen, corporations are struggling to secure their profits and build up domestic reserves in anticipation of a recession, so average wages have risen slightly over the past 40 years.
The economy will only start to function when there is a weak yen, some inflation, and higher wages for workers due to poor business performance.
Neighboring South Korea has already shown that raising the minimum wage does not benefit the economy. Surely no one wants to do something so dead.
Why does everyone panic about a typhoon in a cup of tea?
Basically, when rates rise, the stock market cools down. This is investing 101.
The US dollar could also
Strength of the currency market in the fall due to the United States presidential election, this
calm down in November, the
The choice is
as usual.
I believe the war in Ukraine will be over by then and speculators will bet on a developing and stabilizing global market, increasing demand for high-tech commercial components from Japan.
Oh, calm down. It went from nothing to almost nothing. It’s much higher up on the planet.
Quote: Those who own shares see the price of their monetary assets fall.
He will remainArray That is not a problem.
The stock market is a casino separate from real life. You can earn from both falling and emerging inventories.
quote: Receiving tourism. . . may be negatively affected.
Anyway, everyone hates them and complains about them all the time, so this will be popular.
Ordinary and practical people reduce their elective expenses and increase their source of income through side hustles. They know what the economic effects of their governments’ policies will be and try to increase their resilience to what lies ahead by depositing as much money as possible. possible. If not, think about it: if you’re employed, your task is a single point of failure in terms of monetary health. So start executing the side activities and a plan B now. It takes time to create a side hustle that will pay your bills. Start when you lose your task, it’s too late.
I don’t know anything about stocks, but can anyone tell me what the challenge of “panic selling” is? If the stock goes bad, will you actually hold it or take the opportunity to buy more?
I don’t understand.
It is not about shares, but about the economic effects that more expensive cash will have on the ability of companies and capital to operate.
Not everyone is a long-term investor and those adjustments can last years or even a decade. It is better to rescue from above. Instead of positioning yourself “holding the bag. “
This just works, because it is absolutely one-sided and unbalanced. People invest in corporations by buying stocks, funds, etc. , but in return? Companies do not invest in people, pay them high enough salaries, invest in higher qualifications, retraining and upskilling programs, etc. It can be clearly seen at first glance that such an unbalanced economy has no chance in the future.
Japan continues to face economic stagnation for 30 years, and right now.
Japan continues to face economic stagnation for 30 years, and right now.
Japan has been stagnant since the United States imposed the Plaza Agreement on it. This is just one example of how the United States throws its so-called “allies” or “friends” under the bus when the going gets tough. Let’s do the same with China, but China is different: it is a sovereign country with no US troops on its territory (although there are some around its coasts and in one of its smaller provinces).
The “Abe economy” is a very bad idea, the effects of which will only be felt after Abe dies. The printing of a large amount of cash is the cause of the sharp fall of the yen. Abe-san is not a god of Japanese politicians but a poisonous god, the existing stagnation will only torment Japan and other Japanese people with pain for longer!
“Japan is facing economic stagnation as stocks fall after the gains. “
It is simply a matter of Japan embarking on a global economic merger. The discussion is over.
The “Abe economy” is a very bad idea, the effects of which will only be felt after Abe dies. The printing of a large amount of cash is the cause of the sharp fall of the yen. Abe-san is not a god of Japanese politicians, but a poisonous god, the existing stagnation will only torment Japan and other Japanese people with pain for longer!
We can settle for what we disagree with, but let Prime Minister Abe’s soul rest in peace.