Tokyo shares slid sharply on November 20, 2018, as a weak overnight session on Nasdaq hit Japanese technology stocks and Nissan Motor Co was rocked by the arrest of Chairman Carlos Ghosn.
The Nikkei share average finished 1.1 percent lower at 21,583.12, its weakest close since October 31. The broader Topix also fell 0.7 percent to 1,625.67.
Nissan was the most actively traded stock by turnover and dropped 5.5 percent to 950.7 yen, its lowest level since August 2016. The company said Ghosn had been arrested over alleged financial misconduct and would be removed from the board later that week.
According to Nissan, an internal probe began after a whistleblower tip-off and found that Ghosn had engaged in wrongdoing that included personal use of company funds and under-reporting his earnings for years.
“This is shocking,” said Toru Ibayashi, executive director of Wealth Management at UBS Securities Japan.
He added that the under-reporting of corporate salary meant shareholders were denied a proper chance to judge whether the pay was appropriate, and said the episode would force investors to question whether Japanese corporate governance was working.
Some market participants said the fall in Nissan’s share price may not continue for long. Makoto Kikuchi, chief executive of Myojo Asset Management, said the issue was serious from a governance standpoint but would not immediately damage earnings. He also said the stock’s low valuation could attract short-term buyers.
The fallout spread to Nissan-linked companies. Nissan Shatai fell 2.5 percent, while Nissan Tokyo Sales Holdings lost 4.1 percent. Mitsubishi Motors, another member of the Franco-Japanese alliance, dropped 6.9 percent after saying it would also remove Ghosn as chairman.
Elsewhere in Tokyo, Apple Inc suppliers were pressured after the iPhone maker’s shares fell overnight. Murata Manufacturing declined 3.5 percent, while TDK Corp and Kyocera Corp lost 1.9 percent and 1.6 percent respectively.
Chip-equipment makers also weakened, with Tokyo Electron down 1.8 percent and Advantest Corp off 2.7 percent.
The move came as investors digested a broader risk-off tone in global markets, with the Nasdaq decline feeding into selling across Japanese tech names.
Reuters published this report on November 20, 2018.
