Nikkei Average Plunge and BOJ Meeting Summary, Financial Policy in Focus as Yen Hits Record Low

Nikkei Average Plunge, Hit by Global IT Sell-off Led by Alphabet The Nikkei average closed at 64,611 yen on the 24th, down 1,811 yen from the previous day. Alphabet's expansion of AI investment conversely raised investor concerns about profitability, leading to widespread selling, particularly in semiconductor-related stocks. With the full-scale release of Japanese and U.S. earnings results this week, the market is expected to continue searching for a bottom. 123

BOJ July Meeting to Hold Off on Additional Rate Hike, Vigilant for Upside Price Risks In the monetary policy meeting starting on the 27th, the BOJ is leaning toward keeping the policy rate unchanged at current levels. Considering domestic and international economic uncertainties, it will prioritize a stance of watching for a virtuous cycle between wages and prices. However, given the yen's depreciation into the 163-yen range, vigilance against upside risks to prices will continue. 2

Finance Ministry Confirms Considering US Bank Syndicated Loans for Second Round of US Investment and Financing On the night of the 26th, the Ministry of Finance announced on its official X account that it is coordinating with US banks such as JPMorgan for syndicated loans with the Japan Bank for International Cooperation (JBIC) regarding $550 billion (approx. 89 trillion yen) in US investment and financing. The target is a natural gas power plant construction, aiming to facilitate the massive dollar procurement. 4

LDP to Compile Party Opinion on Consumption Tax Cut Within the Week, PM Indicates Instruction A plan has emerged for Prime Minister Takaichi to instruct the LDP executive to consolidate the party's opinions on a consumption tax cut within the week. The ruling party's proposal is reportedly being coordinated around a two-year limited reduction of the tax rate from 8% to 1% starting April 2027. 5

Hitachi Posts Record Net Profit of 800 Billion Yen, Market Cap Reaches 22 Trillion Yen Net profit for the fiscal year ending March 2026 reached 802.3 billion yen, a record high. Structural reforms focusing on digital (Lumada), energy, and mobility have paid off, with the stock price trading in record-high territory. The company also expects sales and profit growth in its current plan. 6

One in Four Citizens Hold NISA Account, Government Sets 40% Stock Ratio Target Finance Minister Katayama announced that the number of NISA accounts has reached approximately 28 million, meaning about one in four citizens holds an account. The government has formulated a financial strategy to raise the proportion of stocks and investment trusts in household financial assets to 40%, comparable to Western levels, by 2040. 7

Yen's Real Effective Exchange Rate Hits Record Low, Bottom in BIS Statistics According to the Bank for International Settlements (BIS) statistics for June, the yen's real effective exchange rate hit its lowest level since the data began in 1994. Together with the won, it has been stuck in the bottom group among 64 countries for seven consecutive months, highlighting the reality of a record-low yen. 8

Takaichi Administration Shifts Fiscal Target from PB Surplus to Debt-to-GDP Ratio In the 'Basic Policy 2026,' the government abolished the primary balance target, instead setting a new goal of stably reducing the debt-to-GDP ratio. It has clearly shifted to a 'responsible proactive fiscal policy' that invests 370 trillion yen in public-private sectors in areas like AI and semiconductors. 910