Japan Stocks Join Global Selloff as Topix Slumps to January Low

  • Mitsui OSK tumbled after Daiichi Chuo filed for bankrupcty
  • ``Sentiment is bad," says Shinkin Asset's Tomomi Yamashita

A global equity selloff spread to Japan, sending the Topix index to its lowest close since January.

A gauge of shippers fell the most in almost two years, leading losses among the 33 Topix industry groups, as Mitsui OSK Lines Ltd. plunged after Daiichi Chuo KK said it filed for bankruptcy protection. Mitsui OSK is the largest shareholder in Daiichi Chuo, which was halted from trading. Kobe Steel Ltd. sank the most on the Nikkei 225 Stock Average after cutting its annual profit forecast by more than half amid slowing sales in China. Every company in the Nikkei 225 declined.

The Topix dropped 4.4 percent to 1,375.52 at the close in Tokyo, the lowest since Jan. 19, with about 31 shares falling for each that rose. The Nikkei 225 slid 4.1 percent to 16,930.84. The yen rose 0.4 percent to 119.47 per dollar after strengthening 0.6 percent on Monday as investors fled risky assets. The Standard & Poor’s 500 Index tumbled 2.6 percent to a one-month low as commodity companies retreated after weak economic data from China and biotechnology shares plunged.

“Volatility is here to stay for the short term,” Tim Schroeders, a portfolio manager who helps oversee about $1 billion in equities at Pengana Capital Ltd. in Melbourne, said by phone. “To blindly hope that the markets are going to go up any time soon in the absence of a foreseeable catalyst isn’t reasonable at this point.”

Leading Losses

The Nikkei 225 is leading losses among developed-market benchmark indexes this month amid increasing concern that slowing economic growth in China will damp company profits in Japan. A gauge of industrial profits fell the most in at least four years, a report showed on Monday, ahead of manufacturing data this week that should provide further clues on the health of Asia’s largest economy.

E-mini futures on the S&P 500 slid 0.2 percent. A gauge of U.S biotechnology stocks tumbled 6 percent Monday after sinking into a bear market last week, while Valeant Pharmaceuticals International Inc. shares slumped the most in four years. Equity markets have been turbulent in recent weeks amid confusion over the Federal Reserve’s tightening policy.

“The slowdown in China is spreading to other Asian economies, Brazil and Australia, and weakness in emerging countries could echo throughout the overall world economy,” said Toshihiko Matsuno, chief strategist at SMBC Friend Securities Co. in Tokyo. “We still don’t know when market fears will end about China’s slowdown, and because of this investors are turning to cash and safe assets.”

Glencore Plunges

Glencore Plc plunged 29 percent in Hong Kong Tuesday, after a record rout in London, on concern that the commodity trader and miner isn’t cutting its debt load quickly enough amid reduced demand for metals and mineral from China. A Topix gauge tracking Japanese trading houses sank 5.8 percent, while iron and steel producers dropped 6.1 percent.

The Topix Marine Transportation Index tumbled 6.4 percent, its steepest decline since October 2013. Mitsui OSK led the plunge with a 7.4 percent drop after Daiichi Chuo filed for bankruptcy protection in Tokyo with 120 billion yen ($1 billion) in liabilities. It will be delisted on Oct. 30, the Tokyo Stock Exchange said.

Kobe Steel tumbled 11 percent, its steepest decline since March 2011. The steelmaker said it now forecasts net income of 25 billion yen for the year to March 2016, 58 percent lower than its July outlook of 60 billion yen, citing falling sales at its construction machinery unit because of China’s slowing economy.

“It was said that second-half earnings would be good, but concern that it’s going to be bad is intensifying. We have to think about the downside risks,” said Tomomi Yamashita, a fund manager at Shinkin Asset Management Co. Ltd in Tokyo, which oversees 758 billion yen. “Sentiment is bad.”

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