Forced Selling by Retail Investors Deepens Japanese Stock Rout

The sharp decline of the Japanese stock market, with the Topix index dropping over 7%, is likely due to significant forced selling by retail investors. These investors, who had increased their margin buying to an 18-year high, are being compelled to sell their stocks as prices fall to cover their positions. This trend is further fueled by the attractive investment climate earlier this year, driven by hopes of economic growth and new tax-free investment accounts, which attracted investors with potentially limited experience in market downturns. While some market analysts believe this might be a temporary climax, the overall sentiment suggests that it will take time for the market to regain stability.