Depressing News on Asian Stock Exchange

The price of Takata has plunged nearly 20% Wednesday on the Tokyo Stock Exchange, according to information from Bloomberg News indicating that the Japanese equipment estimated at 2,700 billion yen (21 billion euros) cost of airbag recalls in its worst scenario.

According to Bloomberg, citing a person familiar with the, Takata reached this sum by encrypting the entire cost of any reminder 287.5 million airbags, presumably corresponding to all potentially defective models.

The stock has fallen at the end of 100 yen (-19.45%), the maximum loss allowed for the day.

In addition, according to Reuters, Honda had quietly asked Takata to change the design of airbags after explosions in the manufacturer’s vehicles have been associated with at least four injuries and one death. All without informing US regulators. A revelation that could weaken Honda and Takata involved in some 100 federal procedures and dozens of state procedures.

Honda, which was the first customer of Takata prior to distance recently, also saw its stock plummet in the wake of these news reports: it fell by 3.62% to 2992.5 yen.

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Markets In China Crash and Puts Stress on Global Economy

The Tokyo Stock Exchange ended Thursday down more than 2% within the scope of the further fall in Chinese equity markets after the central bank’s second largest economy has accelerated the devaluation of the yuan.

The Nikkei lost 423.98 points, or 2.33%, to 17,767.34. The Topix, broader, fell 30.90 point (2.08%) to 1457.94 points.

The Nikkei has posted its fourth straight session of decline and was down more than 6.5% since the beginning of the year, following a gain of 9.1% for the whole of last year.

Chinese stock markets closed prematurely Thursday after falling more than 7% after less than half an hour of exchange, which dive as Monday once again triggered the activation of any new “circuit breakers “set up after the crash of the summer.

The PBOC has caught short market participants in setting the central rate of the Chinese currency to 6.5646 yuan to one dollar, the lowest since March 2011.

This represents a decline of 0.5% on Wednesday and is the sharpest daily fall since mid-August, when an unexpected devaluation of 2% had been wavering world stock markets.

The weakening of the yuan translates into a stronger yen, which weighed on many export stocks of the Tokyo Stock Exchange.

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Japanese Yen Reacts To New Government

The Prime Minister of Japan, Shinzo ABE, has formed a new government with the goal of continuing on the path of fiscal consolidation and the reduction of public debt.

This ABE to restrictive economic policy government is always balanced by the loose monetary policy of the Central Bank of Japan (BoJ), especially since the rise in the spring of the sales tax (VAT) has generated a sharp decline of household consumption.

This decline is probably temporary but it has resulted in a negative growth rate of Gross Domestic Product (GDP) of Japan in the second quarter, quarterly and annual basis. It therefore encourages the Central Bank to maintain the depreciation of the exchange rate of the Japanese Yen to promote corporate profits from exports.

The second estimate of economic growth in Japan in the second quarter will be announced next Monday, September 8. This is an important statistic will follow the monthly report of the Central Bank of Japan on Friday.

On the foreign exchange market, the Japanese Yen has been neutral since the beginning of the year with a lateral phase transition that captures so Chartist on Yen currency as an index, a triangular consolidation.

In recent sessions, the Yen is losing ground on the Forex and seems to switch the role of a neutral factor in a bearish factor.

It is true that monetary fundamentals Japan argue for a decline in the yen, especially since the finding of the negative impact of the VAT rise on economic growth and while it is accepted that the falling Yen supported export companies in recent months.

At all of these economic data is compounded by the appreciation in share price since the end of the first week of August, including new highs US indices, an attraction to risk adverse to the Japanese Yen.

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