Tokyo shares opened lower on November 20, 2018, as weakness in U.S. technology stocks and the shock arrest of Nissan Motor chairman Carlos Ghosn weighed on sentiment. The Nikkei share average fell in morning trade, with automakers and chip-related names among the biggest drags.
The Nikkei dropped 0.6 percent to 21,682.19 in midmorning trading, while the broader Topix index eased 0.4 percent to 1,630.63. Nissan Motor Co was the most actively traded stock by turnover and sank 6.5 percent to 940 yen, its weakest level since July 2016.
Nissan said Ghosn had been arrested over alleged financial misconduct and would be removed from the board that week. The company said an internal probe, launched after a whistleblower tip-off, found wrongdoing that included the personal use of company money and the under-reporting of his earnings for years.
“This is shocking,” said Toru Ibayashi, executive director of Wealth Management at UBS Securities Japan.
He added: “By under-reporting his corporate salary, he basically deprived Nissan’s shareholders of opportunities to judge if the amount of his salary was appropriate. This incident will make investors review if Japanese corporate governance is working.”
Some market participants argued the sell-off in Nissan may not deepen much further, even though the governance fallout was severe. Makoto Kikuchi, chief executive of Myojo Asset Management, said: “This is a big corporate governance issue, but it’s not something that would affect its earnings right away,” and noted that the stock was trading well below book value, which could attract short-term buyers.
Mitsubishi Motors, another member of the Franco-Japanese partnership, also fell by about 6 percent and said it would remove Ghosn as its chairman.
The broader market also reflected overnight losses on Wall Street. Apple Inc suppliers were sold after the iPhone maker’s shares fell sharply, with Murata Manufacturing <6981.T> down 2.8 percent, TDK Corp and Kyocera Corp both off 1.2 percent, while Tokyo Electron lost 1.5 percent and Advantest Corp slipped 1.0 percent.
Reporting by Ayai Tomisawa
