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Why did the Nikkei 225 Index fall 12.4%? Southwestern Financial Group: The risk of the Nikkei 225 Index bubble accumulation will increase in the future, and there may be a more substantial adjustment.

AInvestMonday, Aug 5, 2024 7:10 am ET
1min read

Yang Yulei, a reporter with Southern Financial Journal, is reporting from Guangzhou

The Japanese stock market plunged dramatically on August 5, triggering a circuit breaker for the Nikkei 225 Futures and the Nikkei 225 VIX Futures. At the close, the Nikkei 225 Index fell 12.4% to 31,506 points, wiping out all the gains for the year.

"The Japanese stock market once rose above 40,000 points, but with the appreciation of the yen, the risk of forming and collapsing stock market bubbles is increasing. With the tightening of monetary policy and the decline of the external stock market, especially the US stock market, it will trigger a sharp decline in the Japanese stock market," said Fang Ming, director of the Global Financial Strategy Laboratory of the Southwest University of Finance and Economics, in an interview with Southern Financial Journal.

Fang pointed out that the Japanese interest rate hike on July 31 had certain limitations and ignored the impact on the financial market. He believed that the current primary task of the Bank of Japan was to maintain the stability of the financial market through appropriate monetary policy," he said.

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