Chapter 1981

Just as the Japanese government and major leading companies were holding emergency meetings to study market rescue policies.

The Japanese stock market had already lost control; when the afternoon session opened, leading stocks in 17 major sectors including power, electronics, cement, construction, and trade all fell across the board, with an average decline of nearly 12%.

Especially the eleven fraudulent companies such as Sony, Kobayashi Chemical, Hitachi, and Mitsubishi became the sectors with the most sell-offs.

Among them, Kobayashi Chemical fell by a cumulative 42%, almost halved, while Sony and Hitachi fell by 33% and 31% respectively.

At exactly 2:00 PM, the Japanese Cabinet urgently held a press conference, and the Prime Minister attended in person.

At the meeting, in addition to announcing a series of major favorable policies, it was also announced that the government would invest 8 billion US dollars in market protection operations.

Immediately after, more than a dozen fraudulent companies such as Sony and Mitsubishi also jointly held a press conference.

First, they expressed their apologies to all the Japanese people and users around the world with a very sincere attitude.

They solemnly promised to launch a comprehensive and in-depth investigation into this incident and to severely punish the personnel involved.

At the same time, these companies also announced that each of them would invest 5 billion US dollars for market protection.

At the same time, the atmosphere inside the Tokyo Stock Exchange was tense and enthusiastic.

People were anxiously watching the stock market dynamics, looking forward to the occurrence of a miracle.

When someone excitedly announced this series of good news, a burst of cheers suddenly rang out in the entire trading hall.

The Nikkei index, which had been falling rapidly, finally began to slowly stabilize, and even showed a slight rebound before the market closed.

The positive actions of the Japanese government and companies had already begun to show results, and market confidence was gradually recovering.

However, just at 10:00 PM Tokyo time, 8:00 AM New York time, when the morning sun had just arrived.

The eyes of the global financial community focused on New York, USA; Goldman Sachs held a high-profile press conference and announced a series of shocking data to the world.

From 1991 to 1993, a large number of scandals broke out in Japanese financial institutions, involving a large amount of non-performing loans and credit risks within the banking system.

The Japanese government and regulatory departments at the time took swift action and urgently introduced various policies to curb the spread of the crisis.

They attempted to stabilize market confidence through means such as strengthening supervision and adjusting monetary policy.

But unfortunately, these efforts did not achieve significant results.

The problems in the banking system remained serious, non-performing loans continued to increase like a snowball, and credit risks were also intensifying.

Against this background, the Japanese banking industry had to adopt a tightening credit policy.

This measure made corporate financing exceptionally difficult, and many companies fell into difficulty.

Especially those large financial institutions and manufacturing companies were facing unprecedented threats of bankruptcy.

Immediately after, Goldman Sachs released a big bomb, and the evidence announced pointed out.

Tokyo Kyowa Credit Union and Anzen Credit Union were actually burdened with huge non-performing debts amounting to hundreds of billions of yen.

This number left all the "uncrowned kings" (journalists) dumbfounded, which meant that these credit unions were already facing the risk of bankruptcy.

However, things did not end there. Next, Goldman Sachs revealed another shocking fact.

The president of EIE Company, Nakata, had once used a private jet to entertain the Director of Tokyo Customs for a trip to Hong Kong.

And Nakata's intimate relationship with the Deputy Director of the Budget Bureau was also made public.

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On Tuesday, when the Japanese people got up in the morning, they saw the financial scandal reported by the Asahi Shimbun.

This news was like a bombshell, quickly spreading throughout Japan.

Just yesterday, the Cabinet and large companies like Sony jointly released a market rescue plan; this measure had originally allowed market confidence to stabilize to a certain extent.

But who could have expected that this sudden financial scandal would be like a bombshell, instantly destroying the confidence that had been built up with such difficulty.

For a time, the entire Japanese financial community was once again shrouded in panic, and those related investors would face huge economic losses.

People began to have deep suspicions about the relationship between Nakata and government officials; whether there was an improper exchange of benefits between them, this doubt dealt a serious blow to the public's trust in the government.

This incident was like a storm, sweeping across the entire Japanese society, and the Ministry of Finance bore the brunt, falling into chaos.

(The Ministry of Finance is the financial agency of the Japanese government, in charge of finance, banking, and taxation)

People demanded an investigation into Nakata's behavior to find out the truth and maintain justice.

Such a scandal caused a huge uproar in the Japanese government and public, which was no different from a Great Hanshin Earthquake for Japanese politics and economy.

It not only made people worry about the stability of the financial system, but also triggered questions about the government's regulatory ability.

And the stock market was like an abyss; the Nikkei index opened down 1.9%. Within just 6 minutes, the decline expanded to 4%.

By the noon close, the stock index had fallen by 16%, equivalent to a market value evaporation of 460 billion US dollars, close to a bear market standard.

And in the two and a half hours in the afternoon, the dive of the Japanese stock market was almost accompanied by a collapse across all weighted sectors, the unwinding of yen carry trades, and gamblers recklessly shorting Japanese stock indices and government bonds.

At the same time, the main Japanese government bond futures actually rose to a new high of 120 points in more than a month; 10 minutes later, an incredible scene appeared in the yen.

The US dollar against the yen first fell by 1.5%; however, just five minutes later, it miraculously returned to near the opening price.

This dramatic change made those sensitive people immediately realize that the government had begun to intervene in the foreign exchange market. Sure enough, the Bank of Japan subsequently officially announced that they had injected a total of 2 billion US dollars into the money market.

Immediately after, the Nikkei index fell all the way and broke through the important support level of 1300 points.

However, just ten minutes before the close, the stocks of large companies such as Sony, Kobayashi Chemical, and Mitsubishi suddenly began to rise against the market, showing an abnormal fluctuation.

The stock prices that had been suppressed to the point of dying actually rebounded rapidly at an astonishing speed; investors knew clearly that those companies like Sony had entered the market.

At the moment the market closed, Hitachi actually returned to the point before the opening, and more than a dozen companies such as Sony, Mitsubishi, and Kobayashi Chemical also stabilized their fundamentals and led the broad market back to above 1300 points.

However, despite the rebound in the stock market, the pessimistic sentiment of the retail investors was not greatly relieved.

Manufacturing scandals, financial scandals, and Ministry of Finance corruption scandals, combined together, had evolved into a hurricane that would sweep across the Japanese archipelago.

And the market rescue actions of the Bank of Japan and companies like Sony today were just giving them a short breathing opportunity.