By the end of the morning session’s dubious positive close, the Nikkei had already fallen through its post-bubble trough in early trading (compare valuations then and now), taking it to a level last reached 26-years ago (today’s close: 7,162.90). Media reports of mega banks needing to raise capital were finally taken seriously in the afternoon session, spreading selling broadly beyond banks and solidifying the 26-year low close. The N225 has now lost over 2,100 points in the past four days! And Nikkei futures broke the 7,000 level, trading as low as 6,900 in late trading before settling at 7,090 or about 70 points below the regular session. The broader TOPIX sold-off even harder than the N225 to fall to a near 25 year low (today’s close: 746.46). Get ready for bailouts.
東証大引け・26年ぶり安値に沈む 日本の金融システムにも疑念高まる
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[...] To say that the Japanese are sitting on a lot of cash is an understatement. In fact, with as much as $15T of aggregate “AUM,” they continue to struggle (esp. since the YTC was grounded) to find a way to earn better than next-to-nothing returns, given the nation’s miniaturized monetary policy. Individual investors’ long disregard for domestic equities has been a big hindrance in bringing the benchmark Nikkei 225 back to a respectable level (20k remains elusive, but first things first, back to 10k). Don’t despair, however, because the Yamadas and Watanabes are back in action, rising through the wreckage — after the N225 nosedived in October to a 26-year low. [...]