Japan shares fall as Archegos fallout hits financials

By Stanley White
TOKYO, March 31 (Reuters) - Japanese stocks fell on
Wednesday as investors sold financial shares due to growing
uncertainty about the fallout from the margin calls that brought
down New York-based hedge fund Archegos Capital.
The Nikkei 225 Index .N225 was down 0.77% at 29,206.38, as
of 0214 GMT, while the broader Topix .TOPX declined 0.59% to
1,966.19.
Mitsubishi UFJ Financial Group Inc 8306.T fell 2.83%. The
bank said on Tuesday after the market close that it may suffer
losses of around $300 million at its European subsidiary related
to a U.S. client that it did not name. The warning about losses came only a day after Nomura
Holdings 8604.T stunned investors by flagging a potential $2
billion loss from a single U.S. client. "Opinion is divided between those who say this is a problem
confined to one hedge fund and those who warn of even more
losses," said Ayako Sera, a market strategist at Sumitomo Mitsui
Trust Bank.
"It is perfectly understandable that investors would want to
lighten some of their positions in financial shares."
Global investment banks including Nomura and Credit Suisse
CSGN.S may lose more than $6 billion as lending to Archegos
for equity derivatives trades soured, sources said.
However, there is still a degree of uncertainty about the
true scale of the problem, which could continue to weigh on
financial shares, analysts said.
The Topix sub-index for banks .IBNKS.T fell 2.4%, which
was the biggest decline in a week. The sub-index for brokerages
.ISECU.T also dropped 1.7%.
In the positive territory, Sony Corp 6758.T rose 2.87% and
Toyota Motor Corp 7203.T advanced 2.86% as the yen's JPY=D3
decline to a one-year low against the dollar boosted shares of
major exporters.
Japan's new fiscal year will start from Thursday, which
normally leads to a rush of new money into equities, but doubts
about the financial sector could make some investors more
cautious about entering the market, some analysts said.