Japan's Nikkei average plunges to 20-year-low
By Michael Tsang
Bloomberg News Service
TOKYO — Japanese stocks dropped, with the Nikkei 225 Stock Average closing below 8,000 for the first time in two decades. Exporters such as Sony Corp. slid as a slump in U.S. shares added to concern that an attack on Iraq will undermine consumer sentiment and damp global economic growth.
The Nikkei's slide to a 20-year low raised concern that lenders will have to book wider losses on their stock holdings when the fiscal year ends this month.
"The U.S. economy is in a bad state, and war concerns will also be negative for exporters," said Takahiro Nakayama, who helps manage about $800 million at Morley Fund Management in Tokyo. "With the markets falling drastically, it doesn't provide much incentive to buy banking shares," because of concerns over their stock losses. Nakayama recently increased his cash holdings.
The Nikkei fell for a sixth straight day, dropping 179.83, or 2.2 percent, to 7,862.43 at the 3 p.m. close in Tokyo, its sixth decline. The average closed below 8,000 for the first time since March 1, 1983.
The Topix index lost 13.90, or 1.8 percent to 770.62, the lowest since Aug. 1, 1984. Computer-related stocks, automakers and banks accounted for more than two-fifths of the index's drop.
Nikkei futures for March delivery fell 2.7 percent to 7,840 in Osaka and lost 2.2 percent to 7,880 in Singapore. According to orders placed before the market opened, overseas investors sold 15.9 million more shares than they bought through 11 brokerages. That's the sixth day that investors outside of Japan were net sellers of Japanese equities.
Some 615 billion yen in shares traded, 10 percent more than the three-month daily average. Two stocks fell for every one that rose on the Tokyo Stock Exchange's first section.
Benchmarks reversed losses earlier today on expectations that the government may soon implement measures to halt a slide that pushed the Nikkei to its lowest in two decades. Chief Cabinet Secretary Yasuo Fukuda said the government will work with the central bank to stop a further drop in prices.
