Japanese exchange-traded funds (ETFs) experienced a broad decline. As of press time, the CSOP Nikkei 225 Double Daily Leveraged Product (南方两倍做多日经) (07262.HK) fell 5.2%, trading at 163.05 HKD. The CSOP Nikkei 225 ETF (南方日经225) (03153.HK) dropped 3.06% to 123.55 HKD, while the Hang Seng JPX Nikkei 400 ETF (恒生日本东证一百) (03410.HK) declined 1.31% to 6.78 HKD. Conversely, the CSOP Nikkei 225 Double Daily Short Product (南方两倍做空日经) (07515.HK) rose 4.27% to 17.58 HKD.

The moves follow a significant drop in Japanese benchmarks on Friday, with the Nikkei 225 Index falling over 2.5% intraday and the Topix Index declining over 1%. Notably, the Japanese yen has weakened for a consecutive week, pressured by high oil prices, a strong U.S. dollar, and ongoing tensions involving Iran. Additionally, the yield on Japan's 10-year government bond continued to climb, briefly touching 2.700%. This confluence of factors has raised market concerns over simultaneous declines in Japanese stocks, bonds, and the currency.

Analysis suggests that while heavyweight constituents of the Nikkei 225 are benefiting from a "double play" in the AI era, and the Japanese government is using fiscal subsidies to mitigate inflationary impacts, inflationary pressures are expected to persist. Expectations for a potential interest rate hike by the Bank of Japan in June have consequently increased. Although the government is attempting to cushion the blow by releasing crude oil reserves and providing fiscal support, long-term "black swan" risks remain.