Source: The Telegraph – Japan enters bear market as investors question ‘Abenomics’
After hitting an intraday high on May 23 of 15,942.6, Japan’s main index fell as low as 12,548.2 in today’s trading, a fall of 21pc, meaning it entered a bear market – widely defined as a fall of 20pc or more.
“The general disappointment following PM Abe’s growth strategy speech on Wednesday and the subsequent selloff in the Nikkei was probably sufficient for many macro investors to begin questioning the path of Abenomics,” said Jim Reid at Deutsche Bank.
Today’s fall marked the third consecutive day of falls for the index, prompted by investors disappointment after Japan’s premier Shinzo Abe unveiled the “third arrow” of his economic growth strategy to promote growth but failed to deliver any surprises.
Investors had been waiting for Abe to unveil his latest strategy to drive growth, after the first two – huge government spending and a flood of easy money from the central bank, sent the yen plunging and the stock market soaring.
There have also been recent jitters over a slowdown in neighbouring China and the prospect of the US Fed winding down its quantitative easing programme have reversed the trend.
A late rally in Friday’s trading led to the Nikkei closing down 0.2pc, at 12,877.53, just outisde of bear territory.
The late pick-up was caused in part by the Government signalling that the $1 trillion public pension fund would buy more Japanese shares, and news that veteran investor George Soros has thrown his support behind the market.
The Nikkei had jumped 53pc in the months after Mr Abe swept into power in December on his vows to catapult the deflation-dogged Japanese economy out of its decades-long slump, with his pro-spending policies and prescription for aggressive central bank easing which pushed down the yen.