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Nikkei plunges as much as 10% as market panic deepens; REITs pounded

Published 13/03/2020, 04:25
© Reuters.  Nikkei plunges as much as 10% as market panic deepens; REITs pounded
JP225
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TOPX
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By Hideyuki Sano

TOKYO, March 13 (Reuters) - Japan's Nikkei share average

.N225 tumbled on Friday as investors rushed to exit stocks and

real estate funds on fears the global coronavirus pandemic will

scupper the Tokyo Olympics and lead to a recession both at home

and abroad.

The Nikkei .N225 fell as much as 10.1% at one point to hit

a 3-1/2-year low before ending morning trade down 7.97% at

17,081.14.

It was on course to post its biggest decline since March

2011, when the market was decimated by the triple disaster of an

earthquake, tsunami and a nuclear accident.

On the week, it has lost 18.5% and is likely to post its

second worst week ever after a 24% fall in early October 2008.

"It feels like panic. Investors are selling even assets that

should not be largely affected by the coronavirus, ignoring all

the fundamentals," said Takuya Hozumi, global investment

strategist at Mitsubishi UFJ Morgan Stanley Securities.

Selling mounted as investors have little idea now on how

much the global economy will slump as the coronavirus spreads,

forcing many governments to impose more restrictions on daily

life, analysts said.

The fear grew markedly after U.S. President Donald Trump on

Wednesday imposed restrictions on travel from Europe to the

United States while offering little in the way of measures to

support consumption. "With so many restrictions on people's moves, this will be a

man-made recession. If governments stop human moves to such an

extent, they need economic safety nets too," said Hiroshi

Watanabe, senior economist at Sony Financial Holdings.

Watanabe said the Nikkei's current levels suggested the

market has completely priced in a scenario that the Tokyo Games

planned this summer will not happen.

Analysts have estimated that a cancellation of the Games

would reduce corporate Japan's earnings by 24%.

The Nikkei has now fallen 29% from a 15-month peak hit in

January.

"The market has completely priced in cancellation of the

Olympics but we still don't see where the bottom is," Watanabe

said.

All of the Nikkei constituents were in the red, and even on

the main board with more than 2,100 listed shares, all but seven

shares fell. The broader Topix .TOPX fell 7.2% to 1,232.29.

Real estate companies .IRLTY.T were hit severely, falling

a whopping 11.8% to nine-year lows as the COVID-19 outbreak is

expected to encourage remote working, possibly reducing demand

for offices in the future.

Real Estate Investment Trusts, which had been bought

heavily as an alternative to negative-yielding bonds, suffered

brutal declines.

The TSE REIT index .TREIT dived 14.9%, even surpassing its

12.0% fall in October 2008.

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