Tokyo sinks amid growing global concern

Asian equity investors endured another day of big losses as dire US home sales figures cast a long shadow across the region’s markets, and Tokyo stocks hit fresh 16-month lows in spite of the yen retreating from 15-year highs.

The FTSE Asia-Pacific index slumped 1.4 per cent to 223.21, its lowest level in more than a month as only some south-east Asian markets withstood a broad regional retreat on the back of heightening fears over global growth.

“No one wants to take risks right now,” said Tomomi Yamashita, of Shinkin Asset Management. “The US housing data showed some bad results and the risk of a double-dip recession is growing. The market can’t help but be worried.”

Trading in Tokyo was dominated on Wednesday by growing rhetoric from Japanese leaders that they intended to cap the yen’s strength, but equities did not find any support as the session progressed without new policy moves emerging.

After falling below the 9,000 level on Tuesday, the Nikkei 225 Average tumbled a further 1.7 per cent to 8,845.39 after firm policy moves failed to appear, with the broader Topix losing 1.3 per cent to 807.31.

“That the Nikkei has broken below 9,000, which has been a very strong support for a while, is a significant event and it’s urgent that Japanese authorities take action,” said Koichi Nosaka, of Securities Japan.

Adding to the waning sentiment was data showing that Japan’s export growth slowed for a fifth month in July.

Export stocks had another disappointing trading session in response as carmakers led the declines.

Honda , which generates 84 per cent of its revenues abroad, dropped 3.1 per cent to Y2,718 and was the second-biggest contributor to the Nikkei’s decline.

Toyota , the world’s largest carmaker, fell 2.4 percent to a 17-month low of Y2,910 and was the largest drag on the Topix. Share sales also weighed on the market. Bank of Iwate tumbled 11 per cent to Y4,140 as plans emerged that the lender would sell shares to raise extra funds.

Nippon Sheet Glass , which makes glass for cars, solar panels and buildings, slumped 5 per cent to Y189, the steepest drop in the Nikkei 225, after it said it planned to sell up to $576m of new shares to fund expansion in overseas markets including China.

Hong Kong fell for a fourth successive session, but some bargain-hunting ensured the Hang Seng index outperformed the weak regional trend as the benchmark slipped just 0.1 per cent to 20,634.98.

Belle International Holdings surged 4.1 per cent to HK$13.30, the biggest jump on the Hang Seng, after China’s largest retailer of women’s shoes forecast encouraging same-store sales growth. But other China-facing markets fared less well.

Taiwan was the worst performing equity market in Asia on Wednesday as the Taiex index sank 2.6 per cent to 7,736.98, its worst one-day fall in three months. China Airlines led the decline, sliding 6.1 per cent to T$19.30 as the carrier was forced to reduce air fares to the mainland.

The Shanghai Composite index surrendered Tuesday’s gains to fall 2 per
cent to 2,596.58, while the BSE Sensex in Mumbai lost 0.7 per cent to 18,179.64.

South-east Asia remained a small pocket of equity strength in the region as Indonesia’s Jakarta Composite index rose 0.8 per cent to 3,138.91, a record closing high, with strong domestic growth continuing to support stocks.

Singapore’s Straits Times index also advanced, gaining 0.1 per cent to 2,926.55.