Japan’s Nikkei 225 stock index had its biggest one-day surge since October 2008 today (Sept. 9).
Reuters reported that investors were reacting to Japanese prime minister Shinzo Abe’s suggestion that he might cut the corporate tax rate to free up capital for domestic investment. The remarks came at just the right time, as the Nikkei had dipped briefly into negative territory for the year:
But even if traders were elated at the news, the Nikkei Asian Review says whipsawing stocks have caused retail investors to flee the market (paywall). The index had fallen more than 16% since Aug. 10 before today’s rally:
Meanwhile, speculative investors have virtually taken over. The trading value of the Nikkei 225 Leveraged Index ETF, which moves twice as much as the Nikkei average, reached 330 billion yen ($2.74 billion) on Monday—the most in the market. The value was nearly quadruple that of second-ranked Toyota Motor.