Almost one full year after the Bank of Japan introduced a record stimulus, and on the eve of a hike in the national consumption tax, the Japanese stock market is weakening, threatening to wreck Prime Minister Shinzo Abe’s “Abenomics” fiscal program. The Nikkei 225-stock index has fallen 8.98 percent in the quarter through March 31, ending a five-quarter winning streak that still has the market up 68.8 percent since November 2012.

Abe and Bank of Japan Governor Haruhiko Kuroda are struggling to end decades of deflation and wan growth by flooding the economy with cash, weakening the yen—good for big Japanese corporations that export their goods—and implementing structural reforms. These are the so-called three arrows of Abenomics, and it’s still far from certain whether they will take.

A crucial issue has always been whether foreign investors would stick around—or treat the rally as just another in a series of false dawns for a stock market that is still more than 60 percent off its all-time high from the year 1989. These sporadic peaks have all given way to greater losses, and today, with the yen depreciating, it’s even more tempting for international investors to bank their winnings before they are worth less in the future. Bloomberg News reports that foreigners sold $9.5 billion worth of Japanese shares in a single one-week span in March, the most since the 1987 crash. Meanwhile, bets that stocks would fall made up as much as 36 percent of the activity on the Tokyo Stock Exchange.

Japan has the worst-performing primary equity index in the developed world this year, while equivalent gauges have gained 1.27 percent in the U.S., 5.28 percent in Canada, and more than 14 percent in the recovering nations of Italy, Greece, and Portugal.

Faltering Japanese stocks threatened Abenomics in June 2013 before resuming an upward trajectory. This more recent correction comes at an arguably more challenging time, coinciding with doubts about whether the propped-up economic activity can survive shocks such as the new sales tax rate, which will rise to 8 percent from 5 percent. The goal is to keep Japanese consumers spending, instead of sitting on their yen as they did in 1997, when a tax increase is credited with ushering in years of economic shrinkage.

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