TOKYO, Nov. 19 (Xinhua) -- Japan's 225-issue Nikkei Stock Average lost 127.33 points on Thursday to 9,549.47, the lowest intraday close in 4 months. Trade plummeted to below the 9,500 mark at one point as investors opted to cash-in amid increased consternation about hazy economic policy regarding stimulus measures and a slew of corporate equity financing initiatives, as was seen by Mitsubishi UFJ Financial Group Inc.'s plans on Wednesday to flood the market with 1 trillion yen (11.2 billion U.S. dollars) in new common shares, to boost its capital base.
The broader Topix index of all First Section issues on the Tokyo Stock Exchange was down 12.35 points to 837.71, its lowest close in almost seven months. The Topix has fallen 2.5 percent this year, the only decline among the world's 40 largest equity markets, elevating concerns that the value of existing holdings will be eroded by an increase in share sales.
Investor sentiment has been further discouraged by the spate of share issuance initiatives by large corporations to generate funds, as the potential for significant per-share value reductions looms large. Coupled with this the government's delay on issuing clear policy measures regarding the state's intentions to continue injecting funds to heal a downcast economy, also weighed heavily on trade today as, according to market players, when stimulus measures dry up the economy could be sent hurtling back into a deeper recession.
"There's still a lot of policy uncertainty here in Japan, but the world economy is improving and the rising trend for global stocks won't change," "Given the gap between the Nikkei and other markets, as well as technical factors showing it may be oversold, there's a chance of it rising on bargain-hunting," said Hiroichi Nishi, general manager at the equity division of Nikko Cordial Securities.
Mitsubishi UFJ Financial Group lost 4.8 percent to 461 yen and Mizuho Financial Group slid 5.4 percent to 157 yen. Sumitomo Mitsui Financial Group dropped 5.1 percent to 2,705 yen.
MUFG fundraising initiatives announced Wednesday have sparked fears that other banks, particularly Mizuho, may have to follow suit as the pace of recent corporate fundraising share issuance shows little sign of abating.
"The level of this fundraising is a bit big for the market at this point and raises questions about timing. Why not next year, when the economy's supposed to be better? The fact that they're doing this now suggests that company management doesn't believe the economy will improve, and this is hitting the confidence of individual investors," said Kenichi Hirano at Tachibana Securities.
Poor closes for U.S. housing starts on Wall Street and mixed reports about the employment situation sent negative signals about consumer consumption and the pace of the overall U.S. economic recovery to investors and negatively impacted Japanese exporters on Thursday.
Mitsubishi Motors Corp. was a significant drag on the market Thursday, plunging 6.87 to 122, whilst Honda Motor Corp. fell 2.1 percent to 2,775 yen. Toyota Motor Corp. shed 2 percent to 3,470 yen.
Canon Inc. lost 2 percent to 3,390 yen, whilst Sony Corp closed down 2.17 percent at 2,470 yen at the 3 pm bell. Hitachi Ltd. also ended in negative territory dropping 2.33 percentage points to 251.
The purchasing of defensive shares perhaps saved the Nikkei from closing below the 9,500 mark and investors found a haven in Japanese shares not so susceptible to external market influences.
Textile Company Mitsubishi Rayon Co. Ltd., gained 29.52 percent, the biggest advance on the Nikkei Thursday to close at 351 yen. Tokyo Gas Co. Ltd. was up 0.58 percent to 345 yen. Meidensha Corp. who produces a diverse range of light and heavyweight machinery rose 5.68 percent to close at 409 yen.
However pharmaceutical and chemical issues weighed heavily on the Nikkei with Mitsubishi Chemical Holdings Corp. down 5.16 percent to 294 yen and Shin-Etsu Chemical Co. Ltd. lost 1.47 percent to close at 4,680 yen. Mitsui Chemicals Inc. shed 7.08 to 223 yen and Sumitomo Chemical Co. Ltd. retreated to 345 yen a drop of 4.16 yen on Wednesday's close.
Takeda Pharmaceutical Co. Ltd. closed down 0.83 percent to 3,555 yen, whilst counterpart Chugai Pharmaceutical Co. Ltd. also ended trade in negative territory, down 0.06 percent to a 1,663 yen close.
"Today's market shows Japan is a slowly declining nation. I see problems in companies boosting capital before they concentrate on their core competence," said Takeshi Fukushima, a fund manager at Tokyo-based MDAM Asset Management Co.
Trading was active on Thursday, with some 2.6 billion shares changing hands on the Tokyo exchange's First section, compared to last week's daily average of 1.7 billion.
Declining shares outnumbered advancing ones by 2 to 1.
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