Japan's broad-based Topix index booked its lowest close in 25 years today, falling 1.6 per cent as bank shares slipped on worries about their European peers, while exporters largely failed to benefit from a weaker yen.
Bridgestone Corp sank more than 7 per cent after forecasting a bigger-than-expected slide this year as it grapples with weak demand and a stronger yen, while Seven & I Holdings dropped on news that its Seven-Eleven convenience store chain was being investigated by regulators.
“The biggest problem is that there are very few buyers in the market. Risk tolerance of global investors is falling," said Takashi Kamiya, chief economist at T & D Asset Management.
“Even though countries like Japan and the United States are expanding their government spending, consumer demand hasn't followed due to heavy consumer debt, and that will prevent the economy from a full-fledged recovery.”
Nervous investors pushed the benchmark Nikkei average down by 1.9 per cent to 7,416.38, its lowest close since October 27th. The Topix shed 12.06 points to 739.53, the lowest close since January 1984.
On the week, the Topix lost 3.3 percent, while the Nikkei gave up 4.7 per cent.
Although the dollar stayed within striking distance of a six-week high of 94.47 yen hit on trading platform EBS the previous day, exporters failed to receive much help.
Investors usually welcome a weaker yen as it boosts exporters' profits when repatriated, but some market players warned the weaker yen this time was a symptom of broader problems amid growing worry about Japan's economy.
Data on Monday showed the economy suffered its worst quarterly decline since the 1974 oil crisis.
"This time, the weaker yen isn't a good thing. It's part of a broader 'sell Japan' trend," said Masayoshi Yano, senior market analyst at Meiwa Securities.
Reuters