WORLD> Asia-Pacific
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WORLD> Asia-Pacific
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Japan's stocks crash, diving nearly 10%
(Agencies)
Updated: 2008-10-08 15:34 TOKYO -- The Nikkei average plunged 9.4 percent on Wednesday, its biggest one-day drop since the 1987 stock market crash, as fear spread of a global recession, fueled by expectations of a slide in profits at Toyota Motor Corp (7203.T) and a firmer yen.
Panic over the fast-spreading financial crisis dragged down markets across Asia, with Japanese steelmakers such as Nippon Steel Corp (5401.T) sliding, as the Nikkei set another five-year closing low. It has lost 19 percent in the past five days. "The deteriorating outlook for the economy and the deepening financial crisis are pushing fear to its limit," said Mitsushige Akino, chief fund manager at Ichiyoshi Investment Management. "Investors want to dump shares as their willingness to take risks has shrunk, but no one wants to buy even if stocks are valued cheaply." The yen climbed to a six-month high against the tumbling US dollar, as investors stampeded away from stocks and risky positions. The Nikkei posted its biggest one-day fall since a 14.9 percent drop on October 20, 1987, the day after Black Monday, and logged the third-largest one-day drop ever. The Indonesia Stock Exchange halted trading on Wednesday after the benchmark composite index (.JKSE) dropped more than 10 percent, while Hong Kong's main stock market index (.HSI) dropped more than 5 percent. The benchmark Nikkei (.N225) slid 952.58 points to 9,203.32, its lowest close since June 2003. The broader Topix (.TOPX) lost 8.0 percent to 899.01. Trade picked up on the Tokyo exchange's first section, with 2.86 billion shares changing hands, compared with last week's daily average of 2.08 billion. Declining stocks outnumbered advancing ones by more than 37 to 1. Toyota tumbled 11.6 percent to 3,280 yen after the Nikkei business daily said it was likely to post a 40 percent slide in annual profit, thanks to weak sales in North America and slower growth in China. A company source told Reuters that Toyota was considering cutting its annual earnings forecasts due to sluggish demand. Analysts said that even at lower valuations, investors would still shun stocks as more companies were expected to cut their earnings forecasts. "Investors are not selling because Japanese stocks are good or bad, but because of the credit squeeze," said Kenichi Hirano, operating officer at Tachibana Securities. "I see around 9,300 as the possible bottom for the Nikkei average, considering projected corporate earnings for the year ending March 2009." The projected price-earnings ratio of the Nikkei stock average tumbled to a 37-year low at 12.5 times on Tuesday, according to the Nikkei business daily. |
