Despite the consecutive two-day decline in the Japanese stock market on Thursday, causing investors to be fearful, the magnitude of the decline and market dynamics seem to be different from the three-day decline that ended in a crash on August 5th.
According to China Securities Journal, despite the consecutive two-day decline in the Japanese stock market on Thursday, causing investors to be fearful, the magnitude of the decline and market dynamics seem to be different from the three-day decline that ended in a crash on August 5th. The Nikkei 225 index, with technology stocks as the main component, opened down 1.9%, but quickly narrowed and even showed a turnaround in a short period of time. The benchmark index, the TOPIX index, also experienced a similar situation. The Nikkei 225 index eventually closed down 1.05%, and the TOPIX index closed down 0.48%.
In August, financial stocks led the decline in the Japanese stock market, with a double-digit percentage drop, but the weakness of financial stocks in recent days has been relatively mild, and more concentrated in semiconductor-related stocks and companies with exposure to the commodity market. The market volume in the first three trading days of September also decreased by about 43% compared to the same period last month.
Last month, the Bank of Japan's hawkish monetary policy stance disrupted the foreign exchange market and interest rate trading strategies. Compared to August, Japan is currently not at the center of global market volatility, and the volatility in the Tokyo stock market this month is not as high as in other regions.
One factor amplifying the decline in August is the forced selling by retail investors in Japan, who had to liquidate their inflated margin trading positions. Yusuke Sakai, a senior trader at Tokyo T&D Asset Management, said, 'These positions have been liquidated. We are unlikely to see panic selling like before.'
However, following the 3.7% decline in the TOPIX index on Wednesday, the weakness on Thursday may keep investors highly vigilant of potential risks. Takeo Kamai, Head of Execution Services at Leon Japan, said, 'Yesterday's decline makes me think that the market is still unstable, and it was too exhausting last month with such historic volatility. It is incomparable to what is happening now.'