A decline in stock prices contains private consumption and other forms of economic activity through the negative wealth effect. Changes in foreign exchange rates, for example, a substantial yen appreciation might, especially for Japan’s economy, worsen corporate profits and put downward pressure on economic activity.
In addition, it is very likely that a jittery market sentiment itself will make Asian economic entities’ sentiment cautious, thereby containing their spending. IV. Japan’s and China’s efforts  Like that, the European debt problem has been affecting substantially both the Chinese and Japanese economies.