The Japanese stock market plunged by over 1,000 points

On the morning of November 18th local time, the stock markets of Japan and South Korea opened with a sharp decline. The Nikkei 225 Index of Japan dropped by more than 1,000 points during the trading session compared to the previous day's closing. At the same time, due to investors' concerns over the deterioration of Japan's diplomatic relations leading to a decrease in visitors to Japan, stocks related to tourism such as department stores, transportation, and consumption in Tokyo's stock market were sold off by investors, with some stocks falling by more than 10%. Among them, the stock of Takashimaya-Iseido fell by 10.64%, Takashimaya fell by 6.29%, Sanrio fell by 7.8%, Asics fell by 6.6%, Fast Retailing fell by 6.9%, Shiseido, which was highly dependent on tourist consumption, dropped by more than 11%, marking the largest single-day decline since April 4th. Additionally, the stock of Japan's Oriental Land Company, the operator of Tokyo Disneyland Resort, fell by approximately 5%, and All Nippon Airways Holdings' stock fell by 4.74%. In terms of individual stocks, Sumitomo Electric Industries and Fujitsu dropped by more than 7%, SoftBank Group fell by nearly 6%, LASERTEC Semiconductor dropped by more than 5%, and Nippon Steel dropped by more than 4%. Also, Yumiko, Fast Retailing, and other consumer stocks declined.

The sharp decline in the Japanese stock market was like a huge stone thrown into water, causing ripples that spread layer by layer. Among them, the impact on the financial sector was particularly significant. First, it affected Japan's domestic financial market. As the stock market plunged, the yen exchange rate also dropped sharply. The euro against the yen broke through the 180 mark for the first time since 1999. Investors' concerns about the deterioration of Japan's fiscal situation led to the selling of the yen, intensifying the depreciation pressure. The sharp drop in the yen exchange rate further exacerbated the turmoil in Japan's financial market and triggered concerns about the future of the Japanese economy. The stock market plunge and the yen exchange rate plunge led to an increase in investors' demand for Japanese government bonds as a safe-haven asset, but at the same time, the Japanese government was adjusting the upcoming economic measures, with the scale far exceeding the previously estimated 17 trillion yen, which also exacerbated the selling of the yen and the rise in bond yields. The 30-year Japanese government bond yield rose by 2.5 basis points to 3.280%, indicating the rising of risk aversion sentiment in the market and a re-evaluation of the risks of Japanese government bonds. Second, it affected the international financial market. The sharp decline in the Japanese stock market triggered fluctuations in global stock markets. In the Asia-Pacific market, the KOSPI index of South Korea couldn't withstand the pressure and dropped by nearly 1%; the Thai stock market was even worse, dropping by more than 2%; the Vietnamese stock market plunged by nearly 6% shortly after opening. European stock markets were also not spared from this storm. At the time when the Asia-Pacific market just closed, the three major European stock indices opened lower, with declines of more than 1%. Gold futures and spot prices rose after the stock market plunge, indicating an increase in risk-averse sentiment. At the same time, US bond yields also fell, with funds flowing into the bond market for hedging. The sharp decline in the Japanese stock market had a negative impact on the confidence of international investors. Investors began to re-evaluate the risks and returns of global stock markets and reduced their allocation to high-risk assets. This confidence setback may trigger changes in global capital flows and affect the stability of international financial markets.

Third, it affected Japan's economy. Nomura Research Institute's researcher, Kondo Tatsuya, predicted that the Chinese government's travel alert might cause Japan's tourism consumption income to decrease by approximately 2.2 trillion yen in the coming year, dragging down Japan's real GDP by 0.36%. The Japanese government had previously predicted that Japan's potential economic growth rate would increase by 0.6% year-on-year in 2025. Due to the tension in Japan's diplomatic relations, investors expected that alerts, warnings, and reminders related to tourism, study abroad, and education from multiple countries would have a negative impact on the performance of related enterprises, so they quickly sold off related stocks. Investors' concerns about the deterioration of Japan's fiscal situation further exacerbated Japan's economic predicament.

In conclusion, the recent sharp decline of over 1000 points in the Japanese stock market has led to these series of consequences. This serves as a warning that the stability of the financial market is closely linked to the global economic situation, geopolitics, etc. In the future, we still need to closely monitor various risk factors to prepare for possible financial turmoil.