Japan’s Nikkei Falls Below 130000 For First Time In Two Months

Japanese equity market was down again with the Nikkei 225 falling below the 13000 mark for the first time in two months. The utilities and exported stocks experienced the biggest fall.

Japan's Nikkei Falls Below 130000 For First Time In Two Months

The Topix index, which gained 0.8 percent initially, was down 1.8 percent to 1,070.77 at the end of the trading. The benchmark Nikkei 225 slid 0.9 percent to 12,904.02; it’s lowest since April 5, reports Bloomberg.

According to an expert, “Risk money is fleeing,” coupled by concerns over monetary easing in the U.S. This is resulting in a panic among investors forcing them to dump small-caps “as they continue to fall from their high.”

Ministry of Finance data which was released today, points that foreign investors were the biggest net sellers of Japanese shares since March last week.

Julian Jessop, chief global economist at Capital Economics said “The markets’ honeymoon with the Abe government has ended, but it seems premature to consider filing for divorce. … The worst of the correction in the Nikkei may soon be over.”

Equities down

Tokyo Electric Power Co., which owns the Fukushima Dai-Ichi nuclear plant, was down for the second day. In two days, Tokyo Electric Power is down 23 percent, the biggest drop since 2011. Power stocks were down yesterday as there were no plans announced by Prime Minister Shinzo Abe to restart the reactors after they were shutdown following the 2011 nuclear meltdown. Despite the record drop, Tepco is still up 131 percent and is one of the best performing stocks on Nikkei 225.

Consumer electronics giant Sharp fell about 5 percent owing to a stronger Yen while rival Sony slumped 2 percent. Japan’s third-largest maker of televisions gets about 60 percent of its revenues from outside Japan.

Komatsu (6301) ltd lost 3.9 percent. The Tokyo Stock Exchange witnessed the biggest decline since March 14, 2011, lost 13 percent and Toyota Motor Corp (NYSE:TM) was down 1.6 percent.

Of the total 1,709 companies in Topix’s, only 121 gained. The fall was registered among all the 33 industry groups.

Volatile Nikkei

Japan’s Nikkei has been extremely volatile over the past few weeks losing 3.7 percent on Monday. On Thursday last week, the index was down 5.2 percent to 13,589.03 points. Then on the next day the benchmark index gained 1.4 percent, and a week earlier, the index registered a record decline of 7 percent in a single session. After hitting the five-and-half-year high in May, the index has lost more than 20 percent, forcing many experts to say that the market is entering a ‘bear’ phase.

About the Author

Aman Jain
Aman is MBA (Finance) with an experience on both Marketing and Finance side. He has worked as a Risk Analyst for AIR Worldwide, and is currently leading VeRa FinServ, a Financial Research firm. Favorite pastimes include watching science fiction movies, reviewing tech gadgets, playing PC games and cricket. - Email him at amanjain@valuewalk.com