Menu
Tokyo stocks sink after Mori stays, Nasdaq plunges

Tokyo stocks sink after Mori stays, Nasdaq plunges

Tokyo stocks suffered heavy losses on Tuesday morning after Prime Minister Yoshiro Mori's survival of a no-confidence motion failed to quell fears of political uncertainty.

Large-cap technology issues such as electronics giant Sony Corp and Internet investor Softbank Corp were also hit by the U.S. Nasdaq composite index's five percent plunge to its lowest close in more than a year.

The benchmark Nikkei average shed 297.97 points or 2.05 percent to 14,233.68 by the end of the morning session. It briefly fell to 14,227.82, its lowest since March 4, 1999.

The broader TOPIX index tumbled 25.81 points or 1.88 percent to 1,345.15.

"The result of the no-confidence vote was disappointing to say the least," said Tsuyoshi Segawa, general manager of equity derivatives at Sakura Securities. "The budget should go through now, but the political uncertainty's still there."

Parliament is now expected to approve a 4.78 trillion yen ($43.5 billion) supplementary budget which is seen bolstering economic recovery in the first half of next year.

Investors hoping for change were highly disappointed and traders said many were wincing at an embarrassing retreat by Koichi Kato, a ruling party member who had launched a rare challenge to the prime minister before deciding at the last minute to abstain.

"What was Kato's point?," said Tetsuya Ishijima, chief strategist at Okasan Securities. "Expectations for any change in government have been betrayed."

But he also said the market may have been unhappy if Mori had been ousted, a move which was expected to delay budget talks and other policy discussions.

Masatoshi Sato, manager of equities at Mizuho Investors Securities, said: "It doesn't change the fact that the ruling party's slowly falling apart and, with the reformist side backing out from their challenge, there doesn't seem to be much hope left for Japan."

Shares in electronics giant Sony fell 3.57 percent to 7,830 yen, their lowest since late October 1999.

Softbank Corp which is invested in several Nasdaq-listed firms, sank 2.52 percent to 6,580 yen, down about 90 percent from its share-split-adjusted peak of 66,000 yen in mid-February.

Parliament is now expected to approve a 4.78 trillion yen ($43.5 billion) supplementary budget which is seen bolstering economic recovery in the first half of next year.

Investors hoping for change were highly disappointed and traders said many were wincing at an embarrassing retreat by Koichi Kato, a ruling party member who had launched a rare challenge to the prime minister before deciding at the last minute to abstain.

"What was Kato's point?," said Tetsuya Ishijima, chief strategist at Okasan Securities. "Expectations for any change in government have been betrayed."

But he also said the market may have been unhappy if Mori had been ousted, a move which was expected to delay budget talks and other policy discussions.

Masatoshi Sato, manager of equities at Mizuho Investors Securities, said: "It doesn't change the fact that the ruling party's slowly falling apart and, with the reformist side backing out from their challenge, there doesn't seem to be much hope left for Japan."

Shares in electronics giant Sony fell 3.57 percent to 7,830 yen, their lowest since late October 1999.

Softbank Corp which is invested in several Nasdaq-listed firms, sank 2.52 percent to 6,580 yen, down about 90 percent from its share-split-adjusted peak of 66,000 yen in mid-February.

Other market moves by midday:

- Gainers outnumbered losers 883 to 310 on the first section of the Tokyo Stock Exchange, with volume modestly firm at 283.61 million shares against Monday morning's 280.58 million.

- December Nikkei futures dipped 320 points to 14,260.

- Chip and electronics maker Fujitsu Ltd sank 5.11 percent to 1,691 yen and marked a new intraday low for the year with an earlier tumble to 1,686 yen.

- Trans Cosmos Inc fell 8.51 percent to 7,850 yen.

The major Internet investor and data processing services provider cut its group net profit forecast on Monday by 47.5 percent to 4.2 billion yen for the year through next March.

Its shares have fallen more than 85 percent from a February peak of 56,000 yen.

- Mazda Motor Corp sped up 5.88 percent to 252 yen, extending its rally to a third session on its latest reshaping plans, including a partial shift of production to Europe and a jobs cut.

- Office equipment supplier Askul Corp first traded on its debut in the over-the-counter market at 6,000 yen, the same level as at its initial public offering (IPO).

At that price, the shares carry a price-to-earnings ratio of a hefty 92 times, based on a forecast of a 1.38 billion yen net profit for the year to next May.


Follow Us

Join the newsletter!

Error: Please check your email address.
Show Comments