Group 1: Market Trends - The Nikkei 225 index experienced a significant drop of 5.8%, marking the worst decline since 2016, with a decrease of over 15% since its peak on July 11[4] - The recent appreciation of the yen poses challenges for Japanese exports and corporate profits, raising concerns about the stability of the Japanese economy under normalizing monetary conditions[4][7] - In July, overseas investors sold Japanese stocks worth 2.46 trillion yen and 5.66 trillion yen in the third and fourth weeks, respectively, with a total weekly outflow of 1.56 trillion yen on July 26, the largest since September of the previous year[8] Group 2: Corporate Performance - Toyota's operating profit for Q1 2025 was positively impacted by yen depreciation, contributing 370 billion yen, but excluding this effect, profits decreased by 1,825 billion yen (-16%) year-on-year[15] - Major Japanese companies, including Toyota, have shown signs of weakening, with Toyota's sales volume declining by 3.2% year-on-year, primarily due to a 20.8% drop in domestic sales[10][12] - The operating profit of major companies is significantly supported by yen depreciation, with an estimated contribution of nearly 3 trillion yen to profits across 29 listed companies, accounting for 36% of operating profits[17] Group 3: Economic Disparities - Small and medium-sized enterprises (SMEs) in Japan have not benefited from yen depreciation, facing cost pressures from imports while only 25% of SMEs are exporters[17][18] - The import value of SME products is approximately four times greater than their export value, indicating a significant disadvantage compared to larger corporations[18] - The profit margins of large enterprises are substantially higher than those of SMEs, highlighting the economic divide exacerbated by currency fluctuations[20]