Lower Liquidity May Be Behind August's Tokyo Market Plunge

   Tokyo, Jan. 8 (Jiji Press)--An analysis of data provided to Japan's Financial Services Agency by Osaka Exchange has shown that lower market liquidity may have led to the historic Tokyo stock market plunge last August, the agency said Wednesday.
   On Aug. 5, 2024, the benchmark Nikkei 225 average plunged 4,451.28 points, or 12.40 pct, from the previous trading session, marking the largest single-day loss ever. Factors such as market players' concerns over the future of the U.S. economy and a weakening of the yen against the dollar brought on by the Bank of Japan's additional interest rate hike were said to be the culprits behind the Tokyo market plummet.
   The agency was provided with extensive data including those on buying and selling orders involving the Nikkei index futures between Jan. 4 and Aug. 7 of last year.
   The latest analysis is believed to be the first-ever study into the stock market event by financial authorities using actual stock transaction data.
   According to the analysis, the number of orders placed around the vicinity of best quotations rapidly declined from mid-July to early August. During this period, the stock market was such that the small number of orders triggered big stock price fluctuations amid quiet trading.

(2025/01/08-16:38)

To read a full story, please click here to find out how to subscribe.