Shares of Japan’s machinery manufacturers take a big hit
TOKYO: Shares of Japanese machinery makers with heavy exposure to China plummeted on Friday as China and the United States moved closer to a trade war that could damage global growth.
Shares in machinery makers, which account for 20 per cent of Japan’s total exports, had enjoyed strong gains in the past year on the back of brisk demand for investment in electronics and semiconductors in China, Japan’s biggest trading partner.
US President Donald Trump signed a presidential memorandum on Thursday that will target up to $60 billion in Chinese goods with tariffs to kick in after a 30day consultation period. The tariffs would target sectors including technology.
“Responding to rising demand for tech products in China, Japan’s capital goods makers and machinery makers had seen strong exports so they are likely to hit hard from now,” said Shogo Maekawa, global market strategist at JPMorgan Asset Management. The Tokyo machinery sector index slumped 5.6 per cent, helping to pull the Nikkei share average down 4.5 per cent.
Machine tool makers were hammered, with Makino Milling Machine sliding 6.1 per cent, Okuma nose-diving 7.4 per cent and DMG Mori stumbling 6.0 per cent.
Since the beginning of the year, Makino has fallen 15 per cent, while Okuma and DMG Mori have both sunk around 20 per cent.
The Cabinet Office last week said it expects a 3.1 per cent drop in Japan’s exports, the first decline in a year.
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