Tokyo, Nov. 17 (Jiji Press)–Stocks skidded lower almost across the board on the Tokyo Stock Exchange Monday morning, with the key Nikkei average falling below the psychologically important 10,000line to hit the lowest level in more than three months.
After opening lower mainly due to net selling from foreign investors following U.S. stocks’ drop on Friday, the Nikkei average spiraled down as the market plunge threatened to spark a welter of margin calls on issues with heavy outstanding long positions, notably banks and Internet business investor Softbank, brokers said.
“Geopolitical risks related to the Iraq situation caused short- term funds to flow out of the Japanese market,” said Kenichi Hirano, equity general manager at Tachibana Securities Co. “Also, all of closely watched technical charts indicated negative signs,” he added.
At the morning close, the 225-issue Nikkei average stood down 370.26 points, or 3.6 pct, at 9,796.80, slipping below 9,800 for the first time since Aug. 14. On Friday, it fell 170.61 points.
The TOPIX index of all first-section issues was down 33.58 points, or 3.3 pct, at 973.19. It ended down 11.73 points in the previous session.(MORE)Tokyo Stocks Tumble in Morning, Nikkei below 10,000
Declines far outnumbered gains 1,423 to 65 on the first section in the morning, while 39 issues were flat.
Half-day volume came to 542 million shares.
A sluggish performance of banks weighed heavily on the market, said Hiroaki Kuramochi, head of the global equities division at Credit Lyonnais Securities (Japan), noting that investors were disappointed after the Financial Services Agency downgraded the classification of 24 major borrowers in its examination on big banks.
The FSA 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.
Buying from foreign investors, which boosted the Nikkei from a 20- year low in late April, has been dwindling in recent sessions ahead of book closings at many hedge funds in November, brokers 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, Kuramochi said.
Also souring market sentiment was a report by French news agency Agence France-Presse that the Al-Qaeda terrorist network has warned of an attack on central Tokyo if Japan sends troops to Iraq, reigniting worries about geopolitical risks surrounding Iraq, brokers said.(MORE)Tokyo Stocks Tumble in Morning, Nikkei below 10,000
The four major banking groups of Mizuho, Mitsubishi Tokyo, UFJ and Sumitomo Mitsui sank. Other financial issues were also clobbered by selling.
Also beaten down were Internet-related issues. Softbank briefly scored a daily limit loss, while Yahoo Japan faltered.
Technology issues succumbed to selling pressure, among them Tokyo Electron, Advantest, TDK and NEC.
General contractors were hammered down, including Taisei, Obayashi and Shimizu.
A handful of gainers included drug makers Sankyo and Taisho.END
