Business / Financial Markets | TSE DATA & REPORT

Tokyo stocks plunge on selling for risk aversion

JIJI

Stocks turned down sharply Monday, with a wide range of issues suffering losses amid a risk-averse market mood after a steep sell-off Thursday.

The Nikkei 225 average lost 423.36 points, or 1.87 percent, to end at 22,271.30, the lowest close since Aug. 21. On Friday, the key market gauge gained 103.80 points.

The Topix, which covers all first-section issues on the Tokyo Stock Exchange, closed 27.01 points, or 1.59 percent, lower at 1,675.44 after edging up 0.59 point Friday.

Both indexes stayed deep in negative territory throughout Monday’s session.

Some investors taking an investment approach known as “risk parity” appeared to have sold stocks in response to an increase in the market’s volatility, said Chihiro Ota, general manager for investment research and investor services at SMBC Nikko Securities Inc.

Such investors change components of their investment portfolios to ensure equal risks from all asset classes.

Further declines in stock prices this week may prompt more selling by such investors due to resulting higher volatility, Ota warned.

U.S. Treasury Secretary Steven Mnuchin’s remarks expressing an intention to urge Japan to include a currency clause in a proposed bilateral trade agreement may have dampened market sentiment due to caution over a strengthening of the yen, but the effect was limited, Ota said, noting relatively calm dollar-yen rate movements in Tokyo.

Corporate scorecards to be released in the United States this week and in Japan from late next week warrant attention as factors that could decide the direction of the Tokyo market, said Yoshihiko Tabei, chief analyst at Naito Securities Co.

Falling issues far outnumbered rising ones 1,852 to 223 in the TSE’s first section, while 34 issues were unchanged.

Volume decreased to 1.4 billion shares from 1.688 billion Friday.

Department store operator Takashimaya dropped 4.01 percent, as a small upward revision to its consolidated earnings forecast for the year to February 2019 on Friday failed to impress investors, broker said.

Export-oriented issues met with selling due to growing concerns over a stronger yen after Mnuchin’s remark, brokers said. They included automaker Toyota, semiconductor-related Tokyo Electron and industrial robot producer Fanuc.

Other major losers included mobile phone carrier SoftBank Group and clothing retailer Fast Retailing.

By contrast, Saizeriya jumped 5.33 percent after Mizuho Securities Co. revised up its investment rating and target stock price for the restaurant operator.

Also higher were air line JAL and drugmaker Takeda.

GET THE BEST OF THE JAPAN TIMES
IN FIVE EASY PIECES WITH TAKE 5