News / Economy

    Japan's Stock Prices, Bond Yields Plunge

    Pedestrians are reflected in an electronic stock chart showing Japan's Nikkei 225 at a securities firm in Tokyo, Tuesday, Feb. 9, 2016.
    Pedestrians are reflected in an electronic stock chart showing Japan's Nikkei 225 at a securities firm in Tokyo, Tuesday, Feb. 9, 2016.

    Japan's stock indexes nosedived and the yield on the government's benchmark bond turned negative for the first time Tuesday while the yen surged to a 15-month high. 

    The day of tumultuous trading casts deeper concern about the ability of the Japanese prime minister's "Abenomics" reforms to reverse the country's long moribund economy, the world's third largest.

    Stocks fall

    The Nikkei 225 stock index plunged 918 points, a steep 5.4 percent decline. Every industry category lost ground, with the financial and export sectors hit the heaviest.

    When the yield of the 10-year Japanese Government Bond fell below zero on Tuesday it was the first time such a bond for a G7 nation had a negative yield. The five-year JGB yield also fell to a record low and was the first time in five years that it yielded less than the two-year bond.

    High demand for bonds pushes down their yields and market watchers say they observed a strong desire Tuesday to buy Japanese sovereign debt as a safe place to park cash at a time of rising worry about the global economy.

    Banking woes

    Japan's central bank decided last month to introduce negative interest rates on a portion of deposits for some financial institutions at the Bank of Japan.

    "It's supposed to motivate the banks to loan, but the banks need to fix their head first," said Todd Walzer, chairman and CEO of iland6 Capital, which is involved in business development in Japan for Israeli high-tech companies.

    Japanese banks "will loan endlessly to zombie companies, and not loan to good companies that don't fit their image," Walzer, who has worked in Japan for 25 years, told VOA.

    Japan's growing number of entrepreneurs complain that the country's banks do not see them as fitting that image.

    More entrepreneurship needed

    William Saito, a venture capitalist and special advisor to Japan's Cabinet, told VOA the only way for Japan, with an aging and declining population and reluctant to open to immigration, to again achieve high growth is to encourage entrepreneurship.

    "Large corporates have money, name and management skills, -- exactly things that ventures don't. However, ventures have innovation, speed and creativity that large companies need. It's very complimentary, so we need to figure out how to combine these two and make a 1+1=3," said Saito. 

    ‘Abenomics’ has not been the answer

    Prime Minister Shinzo Abe launched a bold economic revival drive in late 2012, known as Abenomics, with fiscal expansion, monetary stimulus and what was supposed to be sweeping reforms. But that last arrow has missed its mark with critics, who say that in addition to improving corporate governance and reforming such sectors as agriculture and energy it is essential to change labor laws, get more women in the workforce and lower the barriers for immigrants.

    Japan's losses have worldwide effect

    Tuesday's woes in Tokyo also upset stock traders in the other markets in the region that are open during the lunar new year. In Australia, the ASX 200 dropped nearly three percent.

    Currency dealers in Asia described a panic situation with European funds selling dollars -- of which they already have in ample amounts -- and buying the yen and the Swiss franc, seen as safe havens in an uncertain time.

    A stronger yen makes Japan's exports more expensive, highly undesirable for an economy in the doldrums and reliant on sales of its products in other countries.

    Japan's finance minister, Taro Aso, termed Tuesday's surge for the yen as "rough."

    “We will continue to carefully monitor developments in the currency market,” Aso told reporters.


    Steve Herman

    A veteran journalist, Steve Herman is VOA's Southeast Asia Bureau Chief and Correspondent, based in Bangkok.

    You May Like

    Can EU Survive a Brexit?

    Across Europe politicians are asking if the British vote to leave the European Union will set in motion dynamics that will see other member states leave too

    Video Entrepreneurs at Global Summit Tackle Range of Challenges

    Innovators strive to halt sexual harassment in India, improve rural health in Myanmar, build businesses in Africa

    Key African Anti-Venom About to Permanently Run Out

    The tale of Fav-Afrique’s demise is a complicated one that reflects a deeper crisis brewing in global public health

    This forum has been closed.
    Comments
         
    There are no comments in this forum. Be first and add one

    Featured Videos

    Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
    Britain’s Vote to Leave EU Sends Shockwaves Through Global Marketsi
    X
    June 24, 2016 10:43 AM
    Britain’s historic decision to leave the European Union is sending shockwaves through global markets. Markets from Tokyo to Europe tumbled Friday under the uncertainty the ballot brings, while regional leaders in Asia took steps to limit the possible fallout. VOA’s Bill Ide has more from Beijing.
    Video

    Video Britain’s Vote to Leave EU Sends Shockwaves Through Global Markets

    Britain’s historic decision to leave the European Union is sending shockwaves through global markets. Markets from Tokyo to Europe tumbled Friday under the uncertainty the ballot brings, while regional leaders in Asia took steps to limit the possible fallout. VOA’s Bill Ide has more from Beijing.
    Video

    Video Tunisian Fishing Town Searches for Jobs, Local Development Solutions

    As the European Union tries to come to grips with its migrant crisis, some newcomers are leaving voluntarily. But those returning to their home countries face an uncertain future.  Five years after Tunisia's revolution, the tiny North African country is struggling with unrest, soaring unemployment and plummeting growth. From the southern Tunisian fishing town of Zarzis, Lisa Bryant takes a look for VOA at a search for local solutions.
    Video

    Video 'American Troops' in Russia Despite Tensions

    Historic battle re-enactment is a niche hobby with a fair number of adherents in Russia where past military victories are played-up by the Kremlin as a show of national strength. But, one group of World War II re-enactors in Moscow has the rare distinction of choosing to play western ally troops. VOA's Daniel Schearf explains.
    Video

    Video Experts: Very Few Killed in US Gun Violence Are Victims of Mass Shootings

    The deadly shooting at a Florida nightclub has reignited the debate in the U.S. over gun control. Although Congress doesn't provide government health agencies funds to study gun violence, public health experts say private research has helped them learn some things about the issue. VOA's Carol Pearson reports.
    Video

    Video Trump Unleashes Broadside Against Clinton to Try to Ease GOP Doubts

    Recent public opinion polls show Republican Donald Trump slipping behind Democrat Hillary Clinton in the presidential election matchup for November. Trump trails her both in fundraising and campaign organization, but he's intensifying his attacks on the former secretary of state. VOA National Correspondent Jim Malone reports.
    Video

    Video Muslim American Mayor Calls for Tolerance

    Syrian-born Mohamed Khairullah describes himself as "an American mayor who happens to be Muslim." As the three-term mayor of Prospect Park, New Jersey, he believes his town of 6,000 is an example of how ethnicity and religious beliefs should not determine a community's leadership. Ramon Taylor has this report from Prospect Park.
    Video

    Video Internal Rifts Over Syria Policy Could Be Headache for Next US President

    With the Obama administration showing little outward enthusiasm for adopting a more robust Syria policy, there is a strong likelihood that the internal discontent expressed by State Department employees will roll over to the next administration. VOA State Department correspondent Pam Dockins reports.
    Video

    Video Senegal to Park Colorful ‘Cars Rapide’ Permanently

    Brightly painted cars rapide are a hallmark of Dakar, offering residents a cheap way to get around the capital city since 1976. But the privately owned minibuses are scheduled to be parked for good in late 2018, as Ricci Shryock reports for VOA.
    Video

    Video Florida Gets $1 Million in Emergency Government Funding for Orlando

    The U.S. government has granted $1 million in emergency funding to the state of Florida to cover the costs linked to the June 12 massacre in Orlando. U.S. Attorney General Loretta Lynch announced the grant Tuesday in Orlando, where she met with survivors of the shooting attack that killed 49 people. Zlatica Hoke reports.
    Video

    Video How to Print Impossible Shapes with Metal

    3-D printing with metals is rapidly becoming more advanced. As printers become more affordable, the industry is partnering with universities to refine processes for manufacturing previously impossible things. A new 3-D printing lab aims to bring the new technology closer to everyday use. VOA's George Putic reports.
    Video

    Video Big Somali Community in Minnesota Observes Muslim Religious Feast

    Ramadan is widely observed in the north central US state of Minnesota, which a large Muslim community calls home. VOA Somali service reporter Mohmud Masadde files this report from Minneapolis, the state's biggest city.
    Video

    Video During Ramadan, Faith and Football Converge in Lebanon’s Megadome

    In Beirut, a group of young entrepreneurs has combined its Muslim faith and love of football to create the city's newest landmark: a large, Ramadan-ready dome primed for one of the biggest football (soccer) tournaments in the world. But as the faithful embrace the communal spirit of Islam’s holy month, it is not just those breaking their fasts that are welcome.

    Special Report

    Adrift The Invisible African Diaspora

    World Currencies

    EUR
    USD
    0.8780
    JPY
    USD
    105.69
    GBP
    USD
    0.6725
    CAD
    USD
    1.2746
    INR
    USD
    67.302

    Rates may not be current.