Japanese stocks dive deeper into bear market as Trump stuns with travel ban

By Tomo Uetake
SYDNEY, March 12 (Reuters) - Japanese shares tumbled on
Thursday, with major indexes at three-year lows after the United
States rattled markets by imposing sweeping restrictions on
travel from Europe and world health officials declared the
coronavirus a pandemic.
The benchmark Nikkei average .N225 slumped 4.4% to
18,559.63, its lowest closing level since April 2017. The fall
was the second-biggest one-day decline in 15 months and dragged
the index into bear market territory - 23% off its Jan. 17 peak.
The Nikkei's volatility index .JNIV , a measure of
investors' volatility expectations based on option pricing,
jumped more than 10% to 52.09, its highest since March 2011 when
massive earthquakes and a tsunami struck Japan.
The Nikkei slid further below the estimated average cost of
the Bank of Japan's stock purchases around 19,500, raising
concerns about the central bank's credibility and the
sustainability of its hyper-easy monetary policy. The World Health Organization described the new coronavirus
as a pandemic for the first time on Wednesday, adding that Italy
and Iran were now on the frontline of the disease and other
countries would soon join them. U.S. President Donald Trump said Washington will suspend
most travel from Europe, except from the United Kingdom, to the
United States for 30 days starting on Friday. He also announced some other steps, including instructing
the Treasury Department to defer tax payments for entities hit
by the virus.
But investors were hardly convinced those measures will turn
around the global economy as concerns grew that the number of
infections could quickly snowball in many countries.
"I think markets are sending a clear signal to the White
House that the measures announced today were too little too
late," said Mick McCarthy, chief strategist at CMC Markets in
Sydney.
The broader Topix .TOPX plummeted 4.1% to 1,327.88, its
lowest closing since November 2016, sinking deeper into a bear
market.
All of the 33 sector sub-indexes on the Tokyo Stock Exchange
traded lower, with sea transport .ISHIP.T , air transport
.IAIRL.T and mining .IMING.T being the worst three
performing sectors.
"Investors just want to pull out funds from every risk
asset. It doesn't matter whether shares are defensive or which
sector they belong to," said Yasuo Sakuma, chief investment
officer at Libra Investments in Tokyo.
"Looking at bank and real estate shares, there appear to be
worries this could lead to a financial crisis."
Mitsubishi UFJ Financial Group Inc 8306.T , Sumitomo Mitsui
Financial Group Inc 8316.T and Mitsubishi Estate Co Ltd 8802
shed 5.5% each, while the TSE REIT index .TREIT plunged 6.5%.
Among other major names, Toyota Motor Corp 7203.T dropped
3.5%, SoftBank Group Corp 9984.T lost 6.3% and Sony Corp
6758.T declined 4.3%.
Elsewhere, the index of Mothers start-up shares .MTHR
plunged 5.4% to a seven-year trough.