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Nikkei Closes Lower After Bank of Japan Rate Decision

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The stock market in Tokyo fell further on Wednesday after the heavy price losses a day earlier. Investors processed the Bank of Japan’s decision to leave monetary policy unchanged.

 

The Bank of Japan warned that employment and income conditions remain weak due to the impact of the corona pandemic while private consumption continues to stagnate. In addition, the interest rate decision of the US Federal Reserve, which will be announced later in the day, was also looked forward to.

Investors also kept an eye on developments around debt-plagued Chinese real estate developer Evergrande. Hengda Real Estate Group, Evergrande’s main real estate unit, said it would make an interest payment on its domestic loans on Sept. 23. Fears that the Chinese real estate giant will not be able to meet its financial obligation caused turmoil in global stock markets at the start of the week. In Hong Kong, where Evergrande shares are listed, it was impossible to comment on the news as the market remained closed due to a holiday.

In Shanghai, where investors returned after a short holiday period, the main indicator was 0.2 percent higher. The People’s Bank of China kept interest rates on one-year and five-year loans unchanged. However, the Chinese central bank has pumped considerably more money into the markets by buying short-term bonds from commercial lenders so that banks have more capital on hand to absorb shocks. In addition, Beijing has hinted that it will not provide immediate aid to Evergrande but will prevent a knock-on effect if the property group collapses.

The main index in Tokyo, the Nikkei 225, ended up 0.7 percent lower at 29,639.40 points. The Bank of Japan also announced a new loan program for green investment projects to tackle climate change. The Japanese trader in grain and paper pulp Marubeni was among the strongest decliners with a minus of 4 percent. The machine makers Daikin Industries and Makita were also at the bottom, with losses of more than 2 percent. On the other hand, Mitsubishi UFJ Financial Group won nearly 2 percent. The Japanese bank sells its US consumer bank MUFG Union Bank for $8 billion to US Bancorp.

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