<story><title>Japan stocks plunge as much as 7% as Asia shares extend sell-off</title><url>https://www.cnbc.com/2024/08/05/asia-markets.html</url></story><parent_chain><item><author>bamboozled</author><text>Isn&amp;#x27;t this just a little bit irrational?&lt;p&gt;It&amp;#x27;s caused by the fact the bank of Japan put up their interest rate by 0.25% last week? The second rate hike in years.&lt;p&gt;Japanese are extremely cautious and change isn&amp;#x27;t something they deal with on a frequent basis (Japan moves very slowly) so I think this freaked people out. I guess it might signal the end of the government prioritizing corporate profit over the well being of the populace, at least for a few years? Low interest rate, means the Yen would weaken further, which is great for major Japanese companies who deal heavily in exports. Any sign of this changing and it looks like investors run for the hills.&lt;p&gt;What else could be the cause ?</text></item></parent_chain><comment><author>tru3_power</author><text>From what I understand (and I may be completely wrong so please someone correct me) is that these rate hikes are causing the “carry trade” (estimated to be 20+ trillion dollars) to come to an end and investors are unwinding their positions fueled by these low borrowing rates- which is why we’re seeing US stock prices being dragged down as a result as well. (Investors borrowing yen at low value, investing in higher yield equities aka S&amp;amp;P500, and now owe yen at potentially higher than original cost, causing panic selling).</text></comment>
<story><title>Japan stocks plunge as much as 7% as Asia shares extend sell-off</title><url>https://www.cnbc.com/2024/08/05/asia-markets.html</url></story><parent_chain><item><author>bamboozled</author><text>Isn&amp;#x27;t this just a little bit irrational?&lt;p&gt;It&amp;#x27;s caused by the fact the bank of Japan put up their interest rate by 0.25% last week? The second rate hike in years.&lt;p&gt;Japanese are extremely cautious and change isn&amp;#x27;t something they deal with on a frequent basis (Japan moves very slowly) so I think this freaked people out. I guess it might signal the end of the government prioritizing corporate profit over the well being of the populace, at least for a few years? Low interest rate, means the Yen would weaken further, which is great for major Japanese companies who deal heavily in exports. Any sign of this changing and it looks like investors run for the hills.&lt;p&gt;What else could be the cause ?</text></item></parent_chain><comment><author>rtpg</author><text>&amp;gt; Japanese are extremely cautious and change isn&amp;#x27;t something they deal with on a frequent basis (Japan moves very slowly) so I think this freaked people out.&lt;p&gt;I feel like if this is your level of analysis for the entire country you&amp;#x27;re not going to have that many insights beyond &amp;quot;interest rate movements matter more&amp;quot;.&lt;p&gt;There&amp;#x27;s a lot of economic difficulties right now in Japan due to high costs and a stubbornly weak yen. Of course it&amp;#x27;s dangerous to make quantitative arguments with qualitative facts, and it makes it hard to counterbalance the above with a statement like &amp;quot;the weak yen helps exporters&amp;quot;. But if we&amp;#x27;re going off of vibes, a lot of people in Japan are struggling with worse buying power, downstream of an economy that needs to import a lot of raw materials... and that can cause pressure.&lt;p&gt;And combining that with the tech news in the US... well... at least as a narrative there&amp;#x27;s a lot to say!&lt;p&gt;I&amp;#x27;d love to hear something more quantitative though. At the end of the day this all _might be_ vibes, but at one point the economy has to be somewhat linked to something a bit real, right?</text></comment>