Japanese Shares Sink as Yen Gains Amid Renewed Brexit Concern

  • Yen near its highest level in about 2 1/2 years against dollar
  • Exporters weigh most on Topix; Toyota, Mazda shares decline

Japanese stocks fell for a second day while the yen strengthened, as renewed anxiety over the impact on global growth from the U.K.’s decision to leave the European Union spurred a flight to haven assets.

The Topix index dropped 1.8 percent to 1,234.20 at the close in Tokyo, following a 0.4 percent retreat Tuesday. The Nikkei 225 Stock Average lost 1.9 percent. Bank of England Governor Mark Carney warned that risks from Brexit have started to crystallize, triggering a selloff in global stocks as the pound tumbled to its weakest level in three decades. The yen added 0.7 percent to 101.08 a dollar, near its strongest in 2 1/2 years.

There are “fears the global economy will worsen due to Europe,” said Mitsuo Shimizu, deputy general manager at Japan Asia Securities Group Ltd. in Tokyo. “The U.K.’s economic outlook is blurred with uncertainty and the pound’s recent weakness is likely to encourage speculative buying in the yen.”

Investors Torn

Tokyo stocks have been seesawing, with investors torn between concerns over the implications of Brexit and expectations for stimulus packages from policy makers around the globe. The Topix rebounded 4.2 percent last week after plunging 7.3 percent on June 24 following the U.K.’s decision to leave the EU.

“The emphasis is back on the fearful view that there could be a collapse in European banks,” said Kenji Ueno, a Tokyo-based portfolio manager at Sompo Japan Nipponkoa Asset Management Co. After the U.K. vote, “we’d seen the market calm down a little, but we’re back to pricing in possible negative effects,” he said.

Futures on the S&P 500 Index fell 0.3 percent on Wednesday. The underlying U.S. equity gauge dropped 0.7 percent on Tuesday, snapping its longest winning streak in three months.

All but four of the 33 industry groups on the Topix fell, with electric-appliance makers weighing most heavily on the benchmark index. Auto manufacturers were the second biggest drag, with Toyota Motor Corp., the world’s biggest carmaker, dropping 1.7 percent.

  • Mazda Motor Corp. tumbled 6.1 percent. The car builder’s Chinese joint venture will recall 74,310 sedans to replace Takata Corp. air bags after an investigation by the country’s safety regulator.

  • Car-parts maker Alps Electric Co. fell 5 percent. SMBC Nikko Securities Inc. analyst Hiroharu Watanabe lowered his earnings estimate for the Japanese electronic-components sector because of the stronger yen.

  • The Topix Banks Index dropped 3.1 percent to its lowest level since December 2012. Mitsubishi UFJ Financial Group Inc. slid 3.6 percent to trade at 0.39 times book value, the lowest on record.
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