Tokyo stocks plunged more than 5 per cent on Thursday as jittery investors dumped shares on the back of a stronger yen and after Wall Street fell on concerns over global growth.
The benchmark Nikkei 225 index lost 5.15 per cent, or 737.43 points, to 13,589.03, while the Topix index of all first-section shares fell 3.77 per cent, or 44.45 points, to 1,134.42.
The loss accelerated from mid-afternoon as a stronger yen dragged on the Japanese market – yen trading and the benchmark stock index are closely interlinked as the value of the unit affects the competitiveness of Japan’s exporters.
Tokyo’s tumble followed on the heels of a tough session on Wall Street as the Dow Jones Industrial Average fell 0.69 per cent to 15,302.80 on concerns over the global economy and recent surges in US bond yields.
The rise in US yields was “taking the wind out of equity markets generally as fixed income investments begin to look more attractive”, said SMBC Nikko Securities general manager of equities Hiroichi Nishi.
Hirokazu Kabeya, senior strategist at Daiwa Securities, said “investors still remain shaken-up” after the recent volatile trade in Tokyo, including a single-day loss of more than seven per cent last week.
“They don’t see any indication of the downward trend coming to a halt,” he said.
Thursday’s tumble had Japan’s economy minister Akira Amari appealing for calm, saying he hoped “the market would return to a steady tone once the domestic and international situation stabilise,” the leading Nikkei business daily quoted him as saying.
Hours earlier, Chief Cabinet Secretary Yoshihide Suga, the government’s top spokesman, pointed to an Organisation for Economic Cooperation and Development report which slashed its growth forecast for the world’s most advanced economies, except Japan.
“It is important to react calmly to movements in the stock market,” Suga said.
The OECD report on Wednesday trimmed its world economic growth forecast for 2013 to 3.1 per cent from 3.4 per cent, sparking concern about the state of the global economy.
Tokyo has emerged as one of the world’s top-performing bourses after Prime Minister Shinzo Abe came to power in December with his pro-spending policies and prescription for aggressive central bank easing which pushed down the yen.
A weaker currency makes Japanese exporters more competitive overseas and inflates their repatriated foreign income which, in turn, tends to lift their shares.
