2015-08-13 10:08:15
Japanese stocks fell the most in a month as China devalued its currency for a second day, heightening concern growth may slow in the world’s second-largest economy and damping the outlook for Japanese exporters.
Koito Manufacturing Co., which relies on China for about a quarter of its car headlight sales, dropped 3.6 percent. A measure of energy shares slumped the most since March as oil traded near a six-year low. Concerns a weaker yuan would reduce spending by Chinese tourists sent retailers reeling, including J Front Retailing Co., which lost 4.1 percent.
The Topix index plunged 1.3 percent to 1,665.75 at the close in Tokyo, the biggest decline since July 8. The Nikkei 225 Stock Average sank 1.6 percent to 20,392.77. The yen soared by a record against the yuan in offshore trading, bringing its two-day gain to more than 5 percent.
The devaluations “aren’t likely to stop after just two times,” said Daisuke Miyabe, a strategist at Shinko Asset Management Co. in Tokyo. “Not that it will continue endlessly, but they’ll probably keep looking for a level where it stabilizes.”
China’s policy shift follows economic reports this month that showed a plunge in overseas shipments, weaker-than-estimated manufacturing and slowing credit growth. The moves to support exporters and stem the deepest economic slowdown since 1990 heightens the risk of competitive currency devaluations as global demand wanes.
Market Driven
On Tuesday, the People’s Bank of China said it will let markets play a bigger role in dictating its currency’s moves. Wednesday’s fix was 1.6 percent lower than Tuesday’s level, but just 0.1 percent away from the previous day’s closing price.
Weaker-than-expected reports Wednesday on Chinese industrial output and retail sales in July lowered the outlook for the economy, putting additional downward pressure on an already weakening currency.
“For the time being, Japanese markets will be hanging on every word coming out of China,” said Osamu Koizumi, Tokyo-based executive officer at Meiji Yasuda Asset Management Co. “Japanese firms that were bought on expectations of higher demand from Chinese tourists could see the most impact.”
J Front Retailing slumped 4.1 percent, while electronics retailer Bic Camera Inc. tumbled 5.1 percent.