Nikkei Hedge Funds
Nikkei Plummets As Hedge Funds Leave Japanese Market
The Nikkei had a huge decline as hedge funds fled amid fears of radiation in Japan. The country was hit with a tsunami of almost biblical proportions that has left thousands dead, many more injured or without a home, and there are new concerns of a possible meltdown of the reactors at the Fukushima Daichi Nuclear Power Station. The fear of a nuclear disaster has prompted a mass exodus of hedge funds from the Japanese markets.
Nuclear fallout spurred financial fears as Japan’s Nikkei saw its largest two-day drop since 1987 on Tuesday. Losing an additional 10.6%, or 1,015.34 points, on top of Monday’s losses of 6.2%, the Nikkei share average, which closed at 8,605.15, was hammered by the mass rout of hedge funds, which beat mutual funds to the exits.
Record market volumes left mutual fund managers in the dust, and one unidentified manager said in a Reuters report, "Even if we wanted to sell today there was very little we could do. We didn't sell and waited, sidelined because hedge funds were just dumping stocks in panic." Yields on government bonds rose as investors had to sell to offset losses. In an effort to stem the tide of panic, the Japanese central bank added another $98 billion to the money markets, after a cash injection on Monday of $184 billion.
The TOPIX index of Japanese stocks fell 16.3% this week, its worst two days since the crash in October of 1987. At one point the Nikkei was down 14%, after Prime Minister Naoto Kan said that nuclear contamination risk was rising at Fukushima Daiichi on the northeastern coast. Source
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