Nikkei 225 Falls Nearly 3% on Broad Selling

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Includes: EWJ, IIJI, KUBTY, MKTAY, NMR, SNE
by: Steven Towns

The global wave of selling hit Japanese stocks, which never stood a chance from the outset of trading, as the Nikkei 225 opened down about 275 yen (approx. 1.5%). All said and done, the selling was widespread and only a handful of stocks were spared.

The Nikkei 225's 2.85% loss (-515.80) to 17,604, combined with yesterday's 0.5% loss, takes it back to its lowest close since February 9th. Intra-day the N225 was down as much as 4%, or more than 700 yen.

Not a single sector registered a gain today as TOPIX 1st section advancers, totaling just 33, were dwarfed by decliners, totaling 1,676. The index lost 3.23% to 1,752.74.

March futures contracts for the both the N225 and TOPIX fell even further, -3.15% and -3.61%, respectively.

The yen maintained its renewed strength and is now trading between ¥118 - ¥118.20 per US$.

Reuters reports the trading value of the TOPIX 1st section hit an all-time high today of ¥4.83 trillion, topping the prior record of ¥4.65 trillion set in December '05.

NIS Group (NIS) was the only ADR (trading on a major U.S. exchange) that closed higher today in Tokyo, having gained ¥1, or 1.47% to ¥69 ($5.84 ADR equiv. at ¥118.2/$1). Its ADRs lost 2.5% yesterday to $5.53.

The biggest losers among stocks with ADRs include:

    Kubota (KUB) -5.76%, ¥1,177 ($49.79 vs. $50.95)
    Internet Initiative Japan (NASDAQ:IIJI) -5.74%, ¥460,000 ($9.73 vs. $9.58)
    Sony (NYSE:SNE) -5.37%, ¥6,170 ($52.20 vs. $51.70 ADR close yesterday)
    Nomura (NYSE:NMR) -5.33%, ¥2,575 ($21.79 vs $21.50)
    Makita (NASDAQ:MKTAY) -5.02%, ¥4,350 ($36.80 vs. $37.39)

    * ADR prices converted at ¥118.2/$1

I am not surprised to see these names lag, as they all have been some of the biggest gainers in recent weeks.

Autos and electronics manufacturers were also laggards due among other things, to the rise in the yen. Bank stocks meanwhile, were not helped by data that showed Japan's industrial production in January was its biggest month-over-month drop in three years, meaning there really seems to be no reason for a follow-on near-term Bank of Japan rate hike.

Disclosure: The author owns iShares Japan call options and shares of IIJ and NIS Group.

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