Japanese shares have continued to nose dive with the country’s Nikkei and TOPIX stock indexes plunging to their lowest in two years. Traders said foreign and domestic investors were selling.
On Tuesday even building firms fell in contrast to their rises on the first day of trading after the quake from the prospect of making profits from reconstruction work.
The benchmark Nikkei average fell six percent on Monday and nearly 11 percent on Tuesday.
The biggest single day fall was 19 October 1987 – Black Monday – when stock markets around the world crashed and the Nikkei lost 14.9 percent.
Economist Masaaki Kanno, the head of JP Morgan Securities in Tokyo called the sell-off an over-reaction, but was still concerned about the future: “Yesterday I thought the situation could be at the bottom but when I came back to the office today the situation got worse, and if this vicious circle starts, then actually peoples’ risk appetite wanes further and nobody knows how far the Nikkei might then fall.”
Other global stock markets were also hit by Japanese investors selling shares to repatriate funds to pay for the country’s rebuilding programme.
Japan’s central bank is pumping billions more into the financial system to make sure the country’s banks are not overwhelmed by the impact of the disaster.