Japanese stocks tumbled more than 4 percent and turned negative for the year on Tuesday, as fears about China's cooling economy rippled through global markets and pummelled shares of commodity-linked firms and shippers. Data on Monday rekindled lingering anxiety over the world's second-biggest economy when it showed profits earned by Chinese industrial companies declined 8.8 percent, the biggest on-year fall since Beijing began monitoring this data set in 2011.
"Today's market shows that investors are concerned about the global economic outlook," said Hiroaki Mino, director of investment information department at Mizuho Securities. The Nikkei stumbled 4.1 percent to 16,930.84 points, the lowest closing level since mid-January. It was the biggest daily drop since August 24, and wiped out the benchmark's year-to-date gains.
Adding to the sombre mood, Daiichi Chuo Kisen, a mid-tier shipping company, filed for bankruptcy protection with about 120 billion yen in liabilities. The news hurt shares of other shippers which are also struggling to grow earnings due to weak demand, with the Topix sea transport subindex falling 6.4 percent. Mitsui OSK Lines lost 7.4 percent and Nippon Yusen KK fell 6.9 percent.
Steel companies, another sector that has been heavily leveraged to demand in China, were also hit hard. The Topix iron and steel subindex shed 6.1 percent, with Kobe Steel slumping 11 percent after it cut its earnings outlook. JFE Holdings lost 7.1 percent and Nippon Steel and Sumitomo Metal slipped 5.3 percent. Trading houses, which invest in natural resources projects around the world, lost ground. Mitsui & Co tumbled 9.6 percent and Mitsubishi Corp dived 5.5 percent. The broader Topix fell 4.4 percent to 1,375.52, also wiping out its year-to-date gains, with all of its 33 subindexes in the negative. The JPX-Nikkei Index 400 shed 4.5 percent to 12,312.62.
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