Why Nikkei 225 Stocks Have Dropped This Week

Why have Nikkei 225 shares dropped?

Earlier this week, Japanese stock market index Nikkei 225 saw their stocks decrease by -0.15%. While most Asian shares have increased, they continue to struggle as their shares dip to low numbers.

At the beginning of December, their stocks appeared calm. But analysts caught wind of the potential decline.

During the month of October, Nikkei were doing fairly well, and rose by a staggering 13.55%. For most of the year Nikkei was on an uphill journey, but now times tend to favour a different approach.

We see the Nikkei 225 at $21,500 to $22,500 for now, $21,800 at end-2017 and at $22,000 to $23,700 through end-2018,’ Nomura analysts said in a 23 October note. Various analysts speculated there may be a limited upside in the future.

What caused Nikkei 225 shares to plummet?

Many speculated that future long-term challenges will arise for Japan. As a result, businesses like Nikkei spent money on assets in an attempt to counteract the country’s financial problems. Looks like Santa’s going have to pay these guys a visit, because it’s the only hope they may have.

2017 has overall been a positive year for Nikkei. It seems they have cashed in their profit and spent a good chunk of it. Other Japanese businesses are following a similar structure, as their shares have also decreased due to asset building. But they haven’t outlined what assets have been purchased or clarified their purpose.

What does the future hold for Nikkei?

Nikkei’s increased spending has exacerbated the risk of reduced liquidity and increased volatility in the future.

Various analysts expect that they could potentially bounce back. Their spending may set them back for now, however these investments were intended for future risks that may take place. So it may result in a profitable outcome.

Cheers,

Nathan Frangoulis,

Junior Analyst, Money Morning

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