Nikkei falls as political uncertainties sap investor appetite

By Hideyuki Sano
TOKYO, Aug 18 (Reuters) - Japanese shares dropped on
Tuesday, slipping further away from a near-six-month peak
touched last week, as political uncertainties around the world
sapped investors' risk appetite.
Nikkei share average .N225 lost 0.54% to 22,972.43 by
midday, declining further from Friday's peak of 23,338, its
highest level since late February. The broader Topix .TOPX
shed 0.45% to 1,602.60.
The yen's rise fuelled profit-taking in a market saddled by
its already high valuations as well as rising U.S.-China
tensions and uncertainties over U.S. fiscal stimulus.
"The earnings season is over and they weren't really
supportive of a strong market rally we have seen. The market has
been just bolstered by rally in Wall Street shares," said Masato
Kogure, leader of execution group for institutional sales at
Tokai Tokyo Securities.
Net profits of listed Japanese firms fell more than 50% from
a year earlier in the previous quarter, with only
pharmaceuticals and food companies expecting profit growth in
the financial year to next March, analysts at Okasan Securities
said in a report.
The Topix traded at 16.8 times profits forecast by analysts,
near the highest level in a decade.
Some market players also said the news that Japanese Prime
Minister Shinzo Abe underwent a medical check-up in hospital on
Monday raised worries about his health issues and weighed on the
sentiment given his reflationary policy has been a major support
for the market. Airline shares .IAIRL.T tumbled 2.4% after they reported
weak passenger traffics during the "Obon" holiday period earlier
this month due to a rise in domestic COVID-19 infections.
Banks .IBNKS.T fell 2.0% as U.S. bond yields slipped while
the yen's rise against the dollar hit exporters, including
automaker that had surged earlier this month.
Subaru 7270.T fell 2.8% while Mazda Motor 7261.T dropped
2.4%.
Bucking the trend, the index of Mothers start-up shares
.MTHR climbed 2.2% to its highest level since October 2018, on
buying by individual investors.

(Editing by Rashmi Aich)