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Low Valuation of New Prime Minister Weighs on Japanese Stock Market

The stock exchange in Tokyo closed sharply lower again on Wednesday, falling to its lowest level since late August. Investors initially seemed to benefit from the solid recovery in Europe and on Wall Street but threw in the towel again.

 

A low rating for the new Japanese Prime Minister Fumio Kishida caused uncertainty. A clear victory of his ruling Liberal Democratic Party (LDP) party in the upcoming elections in the country seems to be a thing of the past.

The Nikkei in Tokyo eventually lost 1.1 percent at 27,528.87 points. A day earlier, the Japanese main index already lost more than 2 percent. The indicator thus returned the strong price gain that followed the announcement of the departure of Prime Minister Yoshihide Suga. The plans of his successor Kishida to increase the tax on capital gains are putting price pressure on the market. Investors seem quick to secure some profits on the sale of shares before the tax hike. Tech investor SoftBank and robot maker Fanuc, two heavyweights in the index, lost nearly 2 percent.

In China, the stock markets were still closed because of the so-called Golden Week in the country. The Hang Seng index in Hong Kong was 0.4 percent lower in the meantime. Investors are still waiting for news from ailing Chinese real estate group Evergrande, whose stock was suspended early in the week. Reuters news agency reported on Wednesday that two Hong Kong real estate agencies had taken the debt-plagued real estate giant to court over unpaid commissions.

The All Ordinaries in Sydney lost 0.6 percent. In New Zealand, the central bank raised interest rates from 0.25 percent to 0.5 percent. It was the first rate hike in seven years. The central bank also indicated that it would raise interest rates further in the coming period in order to curb inflation and tackle the overstrained housing market. The country thus joined South Korea and Norway, which had previously raised interest rates.

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