Tokyo, Nov. 17 (Jiji Press)–Stocks plunged across the board on the Tokyo Stock Exchange Monday, with the key Nikkei average falling below the psychologically important 10,000 line to close at thelowest level in more than three months.
Renewed concern over geopolitical risks related to Iraq hit a market which was already softer on the recent bout of selling from foreign investors ahead of many hedge funds’ book closings in November, brokers said.
After opening lower following U.S. stocks’ drop on Friday, the Nikkei average spiraled down as individual investors dumped issues with heavy long margin positions after the market plunge threatened to spark a welter of margin calls, brokers said.
The 225-issue Nikkei average finished down 380.23 points, or 3.7 pct, at 9,786.83, the lowest closing level since Aug. 13. It last closed below 10,000 on Aug. 15. On Friday, the Nikkei fell 170.61 points.
The TOPIX index of all first-section issues closed down 34.88 points, or 3.5 pct, at 971.89. It ended down 11.73 points in the previous session.(MORE)Nikkei Tumbles below 10,000 on Heavy Selling
Losers far outnumbered gainers 1,450 to 59 on the first section, while 21 issues ended flat.
Volume came to 1,171 million shares against Friday’s 1,112 million shares.
Investor sentiment soured after French news agency Agence France- Presse reported Sunday that the Al-Qaeda terrorist network has warned of an attack on central Tokyo if Japan sends troops to Iraq, brokers said.
Worries about Iraq-related geopolitical risks caused short-term funds to flow out of the Japanese market into such financial products as gold, the euro and European stocks, said Kenichi Hirano, equity general manager at Tachibana Securities Co.
Although market participants broadly agreed that Japan’s economic fundamentals remain unchanged, which in turn will underpin the stock market, some investors expressed worries about the course of Japanese economic recovery.
“The government’s possible tax increase in the next fiscal year may hamper individual consumption and further delay the nation’s turnaround from deflation,” said Fumiyuki Nakanishi, equity strategist at SMBC Friend Securities Co.
Market watchers are cautiously watching if subdued buying from foreign investors, the driving force behind the Nikkei’s rally from a 20-year low in late April, is merely due to seasonal factors.
Hiroaki Kuramochi, head of the global equities division at Credit Lyonnais Securities (Japan), said, “Foreign investors took a wait- and-see stance amid views that Japanese Prime Minister Junichiro Koizumi’s structural reform may be delayed” after his ruling party failed to score a resounding victory in the Nov. 9 general election.(MORE)Nikkei Tumbles below 10,000 on Heavy Selling
Selling hit the four major banking groups of Mizuho, Mitsubishi Tokyo, UFJ and Sumitomo Mitsui, after the Financial Services Agency said Friday it found a need for eleven major Japanese banks to book losses totaling 900 billion yen related to bad loan disposals for the April-September first half, after taking a fresh look at the status of their major borrowers.
Also beaten down were Internet-related issues. Softbank, with massive outstanding long margin positions, ended limit down.
Technology issues succumbed to selling pressure, among them Tokyo Electron, Advantest, TDK and NEC. So did general contractors, including Taisei, Obayashi and Shimizu.
A handful of gainers included telecommunications carriers NTT, Japan Telecom and NTT DoCoMo.
In index futures trading, the December contract on the Nikkei average ended down 430 points at 9,740 on the Osaka Securities Exchange.END
