Japan's Nikkei average slid 2.6 percent on Friday, as Nomura Holdings plunged on its plans to issue up to $5.6 billion in shares and other financial stocks were hit by concerns that they may also be thinking of big stock offerings. Shares in Nomura, Japan's biggest brokerage, slumped 16 percent while Japan Airlines also continued to tumble, falling 7 percent, after the new transport minister held back his support for a public bailout.
Sentiment was also hurt by comments from China that the world needs to begin preparing exit strategies from stimulus policies and remarks from a Federal Reserve official that rates may need to rise, market players said. Losses were broad-based, with trading houses such as Itochu Corp hurt by falling commodity prices and exporters under pressure as the yen advanced against the dollar.
"There's a sense of uncertainty in the market as the economic steps taken around the world are facing a turning point, though the real economy seems to have found a floor at this point," said Junichi Misawa, a senior fund manager at STB Asset Management. In moderate trade, the benchmark Nikkei shed 278.24 points to 10,265.98, after gaining 1.7 percent the previous day to hit a one-month closing high.
The broader Topix fell 2.9 percent to 922.67. In a holiday-shortened week, the Nikkei slipped 1 percent, although it has gained 16 percent since the beginning of the year. The Nomura news hit a sector already made jittery by a string of events, including financial services minister Shizuka Kamei's interest in introducing a moratorium on the repayment of the principal on mortgages and bank loans to help small and midsize businesses.
Nomura lost 15.9 percent to 573 yen after announcing the share sale, which will dilute existing share value by 30 percent and which led Nikko Citigroup to cut its rating on the brokerage to "sell/high risk" from "hold/high risk" and its target price to 580 yen from 810 yen.
The share sale is Nomura's second since it bought the European and Asian operations of Lehman Brothers. "The issue is larger than we expected and we think potential share price correction below 600 yen must be considered," wrote Nikko Citi analyst Makoto Kasai. Analysts say Nomura's offering could signal another round of fundraising by Japanese banks in the face of a global regulatory push for banks to carry bigger capital buffers to prevent another crisis.
The G20 group of rich and developing countries, now meeting in Pittsburgh, has pushed for global banks to boost their capital by issuing common shares. Mitsubishi UFJ Financial Group, Japan's top bank, lost 6.5 percent to 493 yen. Sumitomo Mitsui Financial Group dropped 5.5 percent to 3,120 yen and Mizuho Financial Group shed 4.4 percent to 176 yen.
Among gainers, consumer lender Aiful, which said on Thursday that it will cut half its staff and shut outlets as part of a restructuring plan, soared 16.7 percent to 119 yen following Nikko Citigroup upgrade of its rating to "hold/high risk" from "sell/high risk." Some 2 billion shares changed hands on the Tokyo exchange's first section, roughly in line with last week's daily average. Declining stocks outnumbered advancing ones by nearly 8 to 1.