FX168 Financial News (Asia Pacific) News The Tokyo stock market fell for the first time in three days on Tuesday (6/4) as automakers were hit by a stronger yen and a safety testing scandal, which caused them to suspend deliveries of some cars.
The Nikkei 225 Index closed down 85.57 points, or 0.22%, to 38,837.46 points. The TSE Index fell 10.59 points, or 0.38%, to 2,787.48 points. #日本市场 #
On the market, sectors such as mining, insurance, petroleum and coal products declined.
The Nikkei Volatility Index (Nikkei Volatility), which measures the implied volatility of Nikkei 225 options, fell 4.43% to 16.84.
Traders said that after the US manufacturing data for May was weaker than expected, the prospects for the Federal Reserve to cut interest rates as early as September heated up, and the dollar remained low at 156 in the Tokyo market.
The broker said that due to the suspension of the recent depreciation of the yen against the US dollar, the stock market remained weak throughout the day, dragging down cars and other export-related issues. The strengthening of the yen has reduced overseas profits that exporters have remitted back to their home countries.
Japan's Ministry of Land, Infrastructure, Transport and Tourism ordered Toyota Motor Corporation, Mazda Motor Company, and Yamaha Motor Company to stop shipping some models after discovering irregularities in certification applications for certain models, which also made investors cautious.
Shingo Ide, chief stock strategist at NLI Research Institute, said, “If shipments are suspended for an extended period, it may damage the overall Japanese economy.”
Quality fraud issues such as Daihatsu Industries that occurred in 2023 also led to the cessation of automobile production and shipments, which became the main reason for Japan's negative gross domestic product (GDP) growth in January-March. Many people predicted that GDP would rebound in April-June, but the automobile problem once again cast a shadow.
Takaki Nakanishi, chief analyst at the Nakanishi Automobile Industry Research Company, believes that the scale of production cuts by Toyota and Mazda is likely to reach 20,000 to 30,000 vehicles within 2 months. Saisuke Sakai of Mizuho Research & Technologies pointed out, “The pace of normalization may slow down in May-June due to this issue.”
The focus is on future administrative penalties. The impact on the economy varies depending on how long it takes to stop shipping. If determined to be highly malicious, the model certification may be cancelled. If car companies lose national certification, cars will not be able to be mass-produced, and to resume production and delivery, they will need to obtain model certification again.
Production would also be quick to resume if there was no malice. Xinjia Yigui of the Dai-ichi Life Economics Research Institute said, “It also depends on the extent of expansion of manufacturers and models that have stopped shipping, and the duration of the suspension of shipments. Currently, it is difficult to determine the impact on the economy.”