The Nikkei 225 Has Been Falling And Could Reach 14,000

May 12, 2016 8:46 PM

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I had previously cautioned that in the event of a slowdown in trade, Japan's economy would be one of the first to suffer, since a weak currency can only do so much to help keep exports afloat. While a slowdown in Chinese growth had always posed a potential threat to exports, the Nikkei 225 could in fact have further room to fall in the event of a Brexit from the EU by the United Kingdom. As one of Japan's largest trading partners, Prime Minister of Japan Shinzo Abe was warned that a Brexit could well lead to Japanese companies withdrawing from the UK. Since the UK is seen as a gateway for such companies to the wider EU market, withdrawal would be costly and hinder EU trade. In this regard, export-oriented companies on the Nikkei 225 would suffer significantly and the index as a whole would continue falling under such a scenario.

To conclude, I anticipate that the Nikkei 225 Index is set to fall further and expect the index to trend downwards for the remainder of this month.

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