TOKYO: Tokyo shares slumped Thursday morning, with exporters hit after the yen surged on a decision to delay a sales tax hike that threatened to dent Japan’s struggling economy.
The benchmark Nikkei 225 index tumbled 2.29 percent, or 387.61 points, to 16,568.12 by the break, extending the previous session’s 1.62 percent fall.
The broader Topix index of all first-section shares slipped 2.09 percent, or 28.43 points, to 1,333.64.
Prime Minister Shinzo Abe on Wednesday said he would postpone raising the levy, which fueled speculation that Japan’s central bank would hold off launching more stimulus, giving the yen a boost.
But analysts said delaying the tax hike highlighted the failure of Abe’s years-long efforts put the economy on a solid footing, and fanned fears about Japan’s ability to tame one of the world’s biggest national debts.
Investors are now keen to see details of a fresh government spending package that Abe said would be unveiled in several months.
The top-selling Yomiuri newspaper earlier said the stimulus could reach 10 trillion yen ($90 billion).
“There’s now less chance of more Japanese monetary policy, particularly when Abe said he’s thinking about doing more fiscal initiatives,” Tony Farnham, Sydney-based analyst at Patersons Securities, told Bloomberg News. “That should have the US dollar on the back foot for a period of time.”
In afternoon trading, the greenback sunk to 108.98 yen from 109.53 yen Wednesday in New York.
The market’s mood was also soured by the lack of significant improvement in manufacturing activity reports for China, the eurozone and the United States, signalling that efforts to boost the global economy have yet to gain traction.
In Tokyo trading, mobile carrier SoftBank dived 2.75 percent to 6,080 yen.
The company announced Wednesday that it planned to sell at least $7.9 billion worth of its stake in Chinese e-commerce giant Alibaba to pay down a huge debt load.
On Thursday, the firm said it would exercise an option to boost that figure to $8.9 billion worth of Alibaba stock owing to upbeat demand for the shares, a SoftBank spokeswoman said.
More than $2.0 billion in shares will be bought back by Alibaba itself while around $1.0 billion in stock would be split between Singapore sovereign wealth fund GIC and a subsidiary of the city state’s investment agency Temasek.
In other trading, the sharply higher yen threatened exporters’ profit outlook and dented their shares.
Toyota dropped 1.23 percent to 5,684 yen, Nissan shed 2.34 percent to 1,083.5 yen, industrial robot maker Fanuc dived 2.24 percent to 16,300 yen and Uniqlo operator Fast Retailing, a market heavyweight, fell 2.81 percent to 28,150 yen.
Energy explorer Inpex slumped 3.01 percent to 871.3 yen and refiner JX Holdings was 1.42 percent off at 421.4 yen. AFP