Japan Stocks Slide After Three-Day Holiday as Carmakers Decline

  • Carmakers and parts suppliers tumble amid VW emissions scandal
  • Investors awaiting Yellen speech in Massachusetts Thursday

Japan’s stocks fell after a three-day holiday as shares caught up to overseas losses amid concern about the outlook for global growth. Carmakers and parts suppliers slumped in the wake of Volkswagen AG’s emissions-cheating scandal.

Mazda Motor Corp. sank 6.8 percent and NGK Insulators Ltd., which counts Volkswagen as a customer, plunged 7 percent. SoftBank Group Corp. was the biggest drag on the Topix index after its largest investment, Alibaba Group Holding Ltd., slumped to the lowest since an initial share sale last year. Sharp Corp. tumbled 5.5 percent after a person familiar with the matter said the supplier of displays to Apple Inc. will miss its first-half profit forecast. Komatsu Ltd. slid 5.8 percent after Goldman Sachs Group Inc. cut its rating on the construction-machinery maker.

“In the long term, the weakening of a huge rival is a plus for Japanese carmakers, but companies that supply Volkswagen won’t be able to escape the selloff,” said Tatsushi Maeno, head of Japanese equities at Pinebridge Investments Japan Co. in Tokyo.

The Topix sank 2.4 percent to 1,426.97 at the close in Tokyo, with all but one of 33 industry groups falling. The Nikkei 225 Stock Average dropped 2.8 percent to 17,571.83, cutting its gain for the year to 0.7 percent. The Standard & Poor’s 500 Index slumped 2.6 percent since Japanese shares last traded on Sept. 18, while the Stoxx Europe 600 Index fell 3.9 percent as the Federal Reserve’s concern about the outlook for global growth and weak Chinese factory data weighed on risk sentiment.

Volkswagen Scandal

Shares of Japan’s carmakers and parts manufacturers traded for the first time Thursday after U.S. officials caught Volkswagen cheating on emissions tests, a scandal that’s wiped 20 billion euros ($22 billion) off the company’s market value. Volkswagen Chief Executive Officer Martin Winterkorn resigned Wednesday, and a gauge of global auto stocks compiled by Bloomberg has fallen 5.4 percent this week.

Mazda led losses among Japan’s auto manufacturers, with Honda Motor Co. and Nissan Motor Co. also falling at least 2.5 percent.

Suppliers also dropped. Transmissions-maker Aisin Seiki Co., which counts Volkswagen as its second-biggest customer, fell 7.4 percent. NGK Insulators tumbled 7 percent and NTN Corp. slumped 8.5 percent.

Chinese Slowdown

A preliminary report Wednesday showed a Chinese factory gauge fell in September to the lowest level since 2009. While China’s slowdown was cited as one reason why the Fed didn’t raise interest rates last week, officials have since been claiming the U.S. economy is strong enough for an increase this year.

Fed Chair Janet Yellen gives a speech in Massachusetts on Thursday. Investors are concerned that the U.S. central bank lacks confidence on how the world’s biggest economy will cope with a weaker global growth outlook, according to Mitsushige Akino, executive officer at Ichiyoshi Asset Management Co. in Tokyo.

“The issue is gauging the extent of the slowdown in China and the ongoing debate about whether the Fed is doing the right thing,” Tony Farnham, Sydney-based strategist at Patersons Securities Pty, said by phone.

A gauge of Japanese manufacturing decreased to the lowest in three months, missing economists’ estimates, a preliminary reading on Thursday showed. The Nikkei Japan Manufacturing PMI index slid to 50.9 this month, below forecasts for a reading of 51.2 and down from August’s 51.7. The final September figure will be released on Oct. 1.

SoftBank, Sharp

SoftBank fell to a two-year low as the market values of its three biggest shareholdings -- Alibaba, Sprint Corp., and Yahoo Japan Corp. -- dropped by 700 billion yen ($5.8 billion) over the past 10 days, according to its website.

Sharp slumped 5.5 percent. The company will miss its first-half profit forecast and is poised to lower its target for the full year as rising competition among suppliers of liquid-crystal displays pushes down prices, a person familiar with the matter said.

Industrial machinery-makers tumbled. Komatsu fell 5.8 percent and Okuma Corp. sank 9.1 percent after Goldman Sachs cut its ratings on both companies to sell from neutral, citing falling demand from China.

E-mini futures on the S&P 500 slid 0.2 percent after the underlying measure lost 0.2 percent on Wednesday. The yen traded at 120.08 per dollar, from 119.70 when Japanese stock markets closed last week.

Japan’s target of achieving 2 percent inflation may be delayed as China’s economic slowdown affects the price of oil and other natural resources, Yasutoshi Nishimura, Japan’s deputy economy minister, said in an interview. Data due Friday will probably show that the Bank of Japan’s preferred measure of consumer prices declined 0.1 percent in August from a year earlier, according to economists surveyed by Bloomberg.

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