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China Fund News Dawn

Japanese stocks plummeted again!

After the overnight plunge in U.S. stocks, Japanese and South Korean stock markets opened sharply lower on August 2: the Nikkei 225 index opened down 1.8%, and the Korea Composite Index fell 2.1%. After the opening, Japanese stocks continued to plunge, with the Nikkei 225 quickly falling below 37,000 points and approaching 36,000 points, with an intraday decline of more than 5%, and the Topix index also fell by more than 5%.

Financial stocks led the decline, with Daiwa Securities falling 21% during the session, the largest intraday drop in history. Daiwa Securities previously announced its first quarter report for 2024, with performance below expectations.

The commercial banking sector fell collectively, with Mitsubishi UFJ Financial Group falling more than 10% during intraday trading, the biggest drop since March 2020.

In addition, large-cap stocks such as Toyota Motor, Sony, Hitachi, and SoftBank Group also experienced significant declines.

Earlier, the Bank of Japan decided to raise interest rates again at its monetary policy decision meeting on July 31, raising the policy rate (unsecured overnight lending rate) from 0-0.1% to 0.25%. This policy will be implemented from August 1.

According to foreign media, citing the views of a Japanese stock investor, "This looks like a severe forced sell-off. I can imagine that many platform-based position structure companies are actively reducing risks, leading to a blind sell-off of any stocks that are even slightly crowded."

Foreign investors, who had been the main driver of the stock market rally, sold a net 1.56 trillion yen ($10.5 billion) of Japanese spot stocks and futures in the week ended July 26, according to data from the Japan Exchange Group.

In addition, Japan's 10-year government bond yield fell 7 basis points to 0.96%, falling below 1%, the lowest since June 20.

South Korea's stock index fell after opening, falling more than 2.6% during the session. SK Hynix fell 7%, and Samsung Electronics, LG Energy Solution, Hyundai Motor and others all saw significant declines.

On August 2, the Bank of Korea said that inflation will continue to ease from August; in view of uncertainties in the foreign exchange market and tensions in the Middle East, it will release quarterly inflation forecasts starting from August.

In addition, the Australian S&P 200 fell by more than 2% in the morning.

On August 2, Taiwan’s stock market also plunged nearly 3% at opening, and TSMC fell 6%.

Editor: Xiaomo

Review: Xu Wen

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