Tokyo stocks fall 1.1% af­ter China yuan cut

The Pak Banker - - BUSINESS -

The Nikkei 225 in­dex at the Tokyo Stock Ex­change was down 225.35 points to 20,495.40 by the break, while the Topix in­dex of all first-sec­tion shares slipped 0.99 per­cent, or 16.71 points, to 1,670.89.

Tokyo stocks fell 1.09 per cent Wed­nes­day morn­ing af­ter China cut the value of its cur­rency for the sec­ond day in a row, ag­gra­vat­ing wor­ries about the strength of the world's num­ber two econ­omy.

The Nikkei 225 in­dex at the Tokyo Stock Ex­change was down 225.35 points to 20,495.40 by the break, while the Topix in­dex of all first-sec­tion shares slipped 0.99 per­cent, or 16.71 points, to 1,670.89.

Tokyo's losses ac­cel­er­ated, in line with sharp falls in other Asian shares and fol­low­ing losses in the US and Europe, af­ter China's cen­tral bank trimmed the ref­er­ence yuan's rate by 1.62 per cent.

The daily fix that sets the value of the Chi­nese cur­rency against the green­back was low­ered to 6.3306 yuan, from 6.2298 the pre­vi­ous day, the Peo­ple's Bank of China (PBoC) said in a state­ment on its web­site.

The move, a day af­ter the unit was de­val­ued by nearly two per cent, added to jit­ters in global eq­uity, forex and com­mod­ity mar­kets and raised con­cerns about the health of the word's sec­ond-largest econ­omy.

The cuts have been widely seen as way to help boost ex­ports as growth slows in China, but have also sparked fears of a war where coun­tries com­pete to re­duce the value of their cur­ren­cies. "Wor­ries about China's eco­nomic slow­down are once again tak­ing cen­tre stage," Hiroichi Nishi, a man­ager at SMBC Nikko Se­cu­ri­ties, told Bloomberg News.

"China prob­a­bly de­val­ued the yuan be­cause it wants to see a re­cov­ery in ex­ports. Ex­port­ing firms in Ja­pan that have a large share of sales in China, such as ma­chin­ery and iron and steel stocks, will see the most im­pact." China's pol­icy shift fol­lows eco­nomic re­ports this month that showed a plunge in over­seas ship­ments, weaker-than-es­ti­mated man­u­fac­tur­ing and slow­ing credit growth.

In Tokyo share trad­ing, au­tomaker Toy­ota fell 1.23 per cent to 8,022 yen, while Nissan, also de­pen­dent on China for sales, dropped 1.72 per cent to 1,173 yen.

Con­struc­tion Ko­matsu tum­bled 2,268 yen Man­u­fac­tur­ing, equip­ment gi­ant 3.2 per cent to while Koito which re­lies on China for about a quar­ter of its head­light sales, dropped 3.70 per cent to 4,680 yen. Denso Corp. fell 1.96 per cent to 5,929 yen as the lead­ing Nikkei busi­ness daily re­ported that Toy­ota will no longer buy the com­pany's nav­i­ga­tion sys­tems.

Energy shares slumped as oil traded near a six-year low, with In­pex down 2.93 per cent to 1,291 yen. In Tokyo forex trade, the dol­lar fetched 125.22 yen early Wed­nes­day up from 125.12 yen in New York late Tues­day. On Wall Street, the Dow fell 1.21 per cent, the broad-based S&P 500 was down 0.96 per­cent while the Nas­daq dropped 1.27 per cent.

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