Japanese Stocks Plunge Most Since March 2011 on Yields

Japan’s Topix index tumbled almost 7 percent, the most since the aftermath of the March 2011 tsunami and nuclear disaster, as financial firms slid amid rising bond yields. Nikkei 225 Stock Average futures traded in Osaka and Singapore fell in after-hours trade, signaling further declines.

Every company in the Nikkei 225 retreated for the first time since April 2005. Consumer lenders lost 11 percent to lead declines among the Topix’s 33 industry groups. Mitsubishi Estate Co., the country’s biggest developer, slid 9.3 percent. Mitsubishi Motor Corp. dropped 14 percent, falling a second day after advancing more than 50 percent in the previous three days. Tokyo Electric Power Co. plunged 13 percent.

The Topix lost 6.9 percent to close at 1,188.34 in Tokyo, the most since March 15, 2011. Volume was the highest on record. Even after today’s decline, Japan’s broadest share measure is still up 2 percent this month and 38 percent for the year. Japan’s 10-year government bond yield touched 1 percent today for the first time in a year.

“Rising interest rates is the story today,” said Tomomi Yamashita, a fund manager who helps oversee the equivalent of $5 billion at Shinkin Asset Management Co. in Tokyo. “There’s also a lot of profit-taking going on. When volatility is high, investors want to take off risk.”

The Nikkei 225 plunged 7.3 percent to 14,483.98. It was the most since the aftermath of the March 11, 2011, earthquake and tsunami that left almost 20,000 people dead or missing and triggered meltdowns at the Fukushima Dai-Ichi nuclear plant.

Contracts on the Nikkei 225 dropped 2 percent as of 6:39 p.m. in Osaka, where trading was briefly halted during the afternoon as the rout tripped circuit breakers. Singapore futures on the measure slipped 1.2 percent.

Options Surge

A gauge of options prices for the Nikkei jumped 58 percent today to a level not seen since the disaster. The Topix’s 50-day volatility rose to 28.8, the highest since May 2011, according to data compiled by Bloomberg. Volume on the 1,709-member index climbed to 7.66 trillion shares, the most ever, according to Bloomberg data going back to 1988.

The Topix and the Nikkei 225 have surged about 40 percent this year, outperforming all major equity indexes amid unprecedented Bank of Japan easing. The Standard & Poor’s 500 Index is up 16 percent. The Stoxx Europe 600 Index rose 11 percent.

Yields on benchmark Japanese government bonds rose to meet 1 percent for the first time in more than a year, while a plunge in the securities’ futures prompted a circuit-breaker halt.

The Bank of Japan injected 2 trillion yen ($19.4 billion) into the financial system today to stem volatility, as benchmark JGB yields swayed the most since the day after the central bank announced unprecedented bond buying.

Yen Jumps

The yen rallied, snapping a two-day drop that took it to the weakest in more than four years, as Japanese shares extended declines.

Exporters fell after a Chinese Purchasing Managers’ Index fell to 49.6, according to preliminary data released today by HSBC Holdings Plc and Markit Economics. That compared with the 50.4 median estimate of 13 analysts surveyed by Bloomberg News. A reading below 50 indicates contraction.

“Investors are concerned that a deterioration of overseas economies will hurt earnings for Japanese companies,” said Ayako Sera, a strategist at Sumitomo Mitsui Trust Bank Ltd., which has the equivalent of $325 billion in assets. “That’s fueling risk-off sentiment.”

Before it's here, it's on the Bloomberg Terminal.