Hong Kong ( CNN ) -- Japan 's main trading index , the Tokyo Nikkei , plunged more than 7 % Thursday , ending a red-hot rally that saw the bourse climb nearly 50 % since the start of the year . Investors reacted to negative news from the United States and China . U.S. Fed Chair Ben Bernanke left an open question on whether quantitative easing would end earlier than hoped , while new China data revealed factory activity fell the first time in seven months . Though questions loom over the world 's first and second largest economies , analysts and economists agree that for Japan , the world 's third largest , things are just fine -- despite this week 's stock slump . The fact that investors pulled out is `` a sign of health rather than a sign of worry , '' said Jesper Koll , Director of Japan Equity Research at JPMorgan in Tokyo . `` When markets go one way then it 's time to be concerned . The ( Nikkei ) has been up basically 70 % over the last seven months . '' In the history of global stock markets , such a major rally is very rare , added Koll . Since World War II , similar events have happened less than eight times . A correction was due . `` This looks like the selloff that so many on the sidelines have been waiting for , '' said Nicholas Smith , CLSA 's Japan Strategist in Tokyo . `` The Topix was undoubtedly overbought . '' Prime Minister Shinzo Abe 's fiscal policies for growth and inflation -- known to many now as Abenomics -- are not to blame so much as financial quakes and questions from the world 's other major economies . In support of Abenomics , the Bank of Japan this past Wednesday affirmed its own policies to buy long-term debt and securities . The move would double the central bank 's monetary base over two years . `` Such conduct of monetary policy will support the positive movements in economic activity and financial markets , contribute to a rise in inflation expectations , and lead Japan 's economy to overcome deflation that has lasted for nearly 15 years , '' the bank said in its policy statement . During those years of deflation and up through Abe 's election to the premiership in December 2012 , Japan had a fiscal policy of `` musaku '' or `` no policy '' -- `` all talk but no action , '' explained JPMorgan 's Koll . Now `` the most import thing is that Japan does have a policy . With Abe there is action . That 's what has been making investors confident . '' Signs of proof can be found in the return to profit of some of Japan 's exporters , in part due to the yen 's weakening against the U.S. dollar past the 100-yen mark . Toyota , the world 's biggest automaker , reported net income of $ 9.7 billion in the fiscal year that ended March 31 -- more than triple its earnings from the year prior . Panasonic forecasts a net income of nearly $ 500 million in the 2014 fiscal year , versus a net loss of some $ 7 billion in 2013 . `` We think they ( corporate profits ) are going to rise by about 50 % over the next twelve months , '' said Koll , who also forecasts Japan 's Topix -- considered more representative of Japan 's stock markets -- will climb to 1,400 by the end of 2013 -- a rise of nearly 17 % .
Koll : Tokyo Nikkei 7 % plunge Thursday more 'sign of health ' than 'sign of worry ' Nikkei has rallied 46 % since the start of 2013 thanks to PM Abe 's fiscal policies . Comment: JP Morgan forecasts Japan 's Topix to climb 17 % by end of 2013 .