Nikkei in Tokyo Plunges 10.6%; Asian Markets Follow

Nigel Thomas
15 Mar, 2011
New York City

Tokyo suffered its second worst decline in stock market in 24 years as panicked investors sold stocks in the early morning after a third blast at the troubled nuclear power plant. The benchmark index plunged 14% before recovering to close down 10.6%. Toyota suspended at all 12 plants in Japan.

[R]6:00 PM Tokyo – Tokyo suffered its second worst decline in stock market in 24 years as panicked investors sold stocks in the early morning after a third blast at the troubled nuclear power plant. The benchmark index plunged 14% before recovering to close down 10.6%. Toyota suspended at all 12 plants in Japan through March 16.[/R]

Panic selling gripped the Tokyo trading after Prime Minister Naoto Kan warned of higher radiation from the troubled Fukushima nuclear power plant.

The Nikkei 225 Stock Average plunged 14% in intra-day trading but managed to recover at close to a decline of 10.6% to 8,605.15. The broader Topix declined 9.5% and the yen rose 0.2% to 81.46 to a dollar.

Trading volume was heavy and at 5 billion shares was ahead of 4.88 billion shares trading yesterday.

The yield on Japanese bonds rose 1.5 basis points to 1.215%.

Bank of Japan pumped 8 trillion yen of liquidity to the system after adding 15 trillion yen yesterday and also decided to increase bond repurchase plan to 10 trillion yen.

Investors began selling shares after the prime minister comments and the market index decline accelerated in the early morning.

Comments form Chief Cabinet Secretary Yukio Edano did not prevent the market plunge. Earlier in the afternoon he said that radiation levels near the nuclear power plant area with explosions were declining below harmful level and a fire at one of the units in the Fukushima Dai-ichi plant.

Shoppers did not waste any time and cleaned up daily supplies and filled up cars with gasoline as most residents stayed indoors in Northern Japan and in Tokyo.

The rise in radiation level around Tokyo metropolitan area also contributed to the panic. The radiation level jumped 23 times but the officials cautioned that the level is still below one tenth of the chest X-ray level.

Vladimir Asmolov, deputy head of Russian nuclear utility Rosenergoatom and a part of the team that battled the Chernobyl disaster said that situation has worsened but the most important “is to keep providing water and power supply to the station. There won’t be a leak of radiation comparable to Chernobyl.”

However, after the market dropped as low as 14% investors began to factor the fallout’s impact on the global markets. Asian markets dropped more than 2% and European markets opened sharply lower with German index plunging 5%.

Commodities closed also lower in Tokyo, Singapore and Sydney trading. Markets in Korea declined 2.4%, in Singapore fell 1.5% and in Shanghai plunged 1.4%.

Tokyo Electric Power evacuated 750 workers from the troubled plant after explosion at the second at the No.2 unit this morning.

The third blast follows the blast at the reactor 3 yesterday and a similar explosion at reactor 1 on March 12. The workers on the plant are battling fire at the unit 4 but it appears to have been contained according to Cabinet Secretary Yukio Edano.

Japan officials confirmed that people within 10 kilometers radius have evacuated and in within 20 kilometers radius were asked to leave the area and within 30 kilometers were asked to stay indoors.

Stock Movers

Tokyo Electric Power plunged 25% and Toshiba Corp dropped daily limit 19% to or 80 yen and Hitachi Ltd dropped 13%. Mitsubishi Heavy Industries Ltd dropped 11%.

Fast Retailing Co dropped 18%.

Toyota Motor closed all its 12 plants in Japan till March 16 and Tokyo Electric Power evacuated more workers from the troubled nuclear power plant. The automaker is likely to miss production of 40,000 vehicles at its plants during the closure.

Japan Steel Works Ltd plunged 16% or 100 yen, its daily limit.

Mizuho Financial Group Inc dropped 10%, Mitsubishi UFJ Financial Group dropped to 321 yen and Sumitomo Mitsui Financial Group Inc plunged 7.2%.