Japan stocks end lower as Archegos woes rattle financials

By Stanley White
TOKYO, March 31 (Reuters) - Japanese stocks fell on
Wednesday as investors sold financial shares due to growing
uncertainty over the fallout from the margin calls that brought
down New York-based hedge fund Archegos Capital.
The Nikkei 225 Index .N225 ended 0.86% lower at 29,178.80,
while the broader Topix .TOPX dropped 1.21% to 1,954.00.
Mitsubishi UFJ Financial Group Inc 8306.T fell 3.87%. The
bank said after the market close on Tuesday 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. Nomura's shares fell
2.9%, down for a third straight session. "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 3.2%, which
was the biggest decline in a week. The sub-index for brokerages
.ISECU.T also dropped 2.1%.
Hitachi Ltd 6501.T fell 7.30% after the Nikkei newspaper
reported the company will buy a U.S. software developer for $9.6
billion. Hitachi confirmed the acquisition after the closing
bell.
In the positive territory, Toyota Motor Corp 7203.T
advanced 3.04% as the yen's JPY=D3 decline to a one-year low
against the U.S. dollar boosted shares of major exporters.
For Japan's 2020/21 fiscal year, which ended on Wednesday,
the Nikkei rose 54.2%, which was the biggest gain since fiscal
1972/73 and highlighted a strong recovery from the shock caused
last year by the coronavirus pandemic.