Tokyo shares sink to lowest in more than 3 years despite BOJ promise to ramp up ETF buying

March 16 (Reuters) - Tokyo stocks slid to their lowest in
three and a half years on Monday as the Bank of Japan's
emergency pledge to boost buying of Exchange Traded Funds (ETF)
by up to double current levels failed to calm investor nerves.
The BOJ move, announced in statement after an emergency
meeting, came as global central banks step up efforts to combat
the widening economic fallout from the coronavirus epidemic.
The benchmark Nikkei average .N225 skidded 2.5% in choppy
trading to finish at 17,002.04, its lowest closing level since
November 2016.
The Nikkei's volatility index .JNIV , a measure of
investors' volatility expectations based on option pricing,
jumped 17% to 60.03, its highest level since March 2011 when
massive earthquakes and a tsunami struck Japan.
"The market got excited by the 12 trillion yen ($113
billion) figure before quickly finding out a footnote that says
it is the maximum figure," said Yusuke Ikawa, Japan strategist
at BNP Paribas.
While the BOJ said it could buy about 12 trillion yen of
ETFs, in a footnote to its statement it also said it will
continue buying ETFs at around 6 trillion yen annually in
principle.
"The market is no longer reacting to each step the BOJ is
taking, looking at whether any of them work. Rather, markets are
reacting negatively because they have lost confidence in the
BOJ," said Yasuo Sakuma, chief investment officer at Libra
Investments.
"Now it's obvious that the BOJ has no card left to play."
BOJ Governor Haruhiko Kuroda was to hold a news conference
from 0700 GMT to explain the policy decision.
Earlier in the day, the U.S. Federal Reserve slashed
interest rates in an emergency move and its major peers offered
cheap U.S. dollars to ease a logjam in global lending markets.
The coordinated global actions were reminiscent of the
sweeping steps taken just over a decade ago to fight a meltdown
of the global financial system, but this time the target was a
fast-spreading health crisis with no certain end in sight.
More than 162,000 are infected and over 6,000 have died of
coronavirus globally. Lockdowns and travel bans spread across
the world over the weekend, affecting tens of millions of
people. On the Tokyo bourse the broader Topix .TOPX shed 2.0% to
1,236.34, its lowest close since July 2016.
Four-fifth of the 33 sector sub-indexes on the Tokyo Stock
Exchange traded lower, with rubber products .IRUBR.T ,
transport equipment .ITEQP.T and electric machinery .IELEC.T
being the worst three performing sectors.
Automakers were hit hard, with Toyota Motor Corp 7203.T
losing 2.4%, Nissan Motor Co Ltd 7201.T falling 3.5% and Honda
Motor Co Ltd 7267.T declining 3.4%.
Elsewhere, Fujifilm Holdings Corp 4901.T gained 0.8% after
the company said it will buy back up to 1.07% of shares worth 15
billion yen. = 106.5600 yen)