Japanese shares dropped to a six-month low on Friday, racking up their fourth consecutive week of decline, as worries deepened over the economic damage from the coronavirus that is spreading rapidly at home and abroad. The Nikkei share average dropped 2.72% to 20,749.75 the lowest close since Sept. 4, 2019. The broader Topix lost 2.92% to 1,471.46, the lowest finish since January last year.
With investors selling a broad range of shares, 97% of shares on the Tokyo Stock Exchange's main board were in the red, as the epidemic spread further in Europe and the United States, while Japan struggled to curb cases at home.
Even rising speculation of more monetary easing around the world this month, including in Japan and the United States, has so far failed to lift the mood. "The Fed's fast responses will be applauded in the long run. But in the near term, even if it cuts rates, it won't stop the virus. Markets are hoping for more measures such as tax cuts and steps to support funding for cash-strapped firms," said Kazushige Kaida, head of foreign exchange at State Street Bank in Tokyo.
SoftBank Group, which owns highly-leveraged tech start-up Vision Fund, lost 6.1%. Tourism stocks took a hit after Japanese Prime Minister Shinzo Abe ordered a two-week quarantine for visitors from China and South Korea. H.I.S. dropped 6.3%, AirTrip fell 8.2%, and KNT-CT Holdings shed 3.8%. Domestic demand-oriented shares that have attracted investors with relatively robust earnings prospects succumbed to profit-taking. Central Japan Railway fell 4.5% and Recruit Holdings 3.3%. Exporters were dented as the yen strengthened to a six-month high.
Honda Motor lost 4.3% and Toyota Motor was down 3.1%. Komatsu lost 3.6% while Canon dropped 3.5%. The financial sector was hurt by plunging US bond yields, which are an important source of interest income amid negative interest rates at home.
MUFG, SMFG and Mizuho Holding fell 3.7%, 4.0% and 3.5%, respectively. The 10-year US Treasuries yield sank to a record low of 0.808%. Internet firm Rakuten lost 6.0% after it abandoned a plan to impose free shipping for all retailers that use its e-commerce site.
Japan's fair competition watchdog has recommended a court order on the company to halt the plan following complaints the firm is abusing its dominant position. Bucking the trend, Seven & i Holdings rose 5.9% after the retailer dropped a bid for Marathon Petroleum Corp's Speedway gas stations in the US after balking at the price, as the market was concerned that the purchase would be costly.