Topix Extends Slump After Entering Correction on Virus Worries

Min Jeong Lee and Ayaka Maki, Bloomberg News

An electronic ticker is displayed at the Tokyo Stock Exchange (TSE), operated by Japan Exchange Group Inc. (JPX), in Tokyo, Japan, on Friday, Dec. 28, 2018. Japanese shares fell, with the Topix index capping its worst annual performance since 2011, in a year that saw U.S.-China trade tensions deal a heavy blow to investor sentiment. Photographer: Kiyoshi Ota/Bloomberg , Bloomberg

(Bloomberg) -- Japan’s Topix index extended its decline after entering a correction Thursday amid the continued global equity sell-off triggered by the coronavirus outbreak.

The benchmark gauge fell for a fifth session Friday, and was down about 13% from a high marked on Dec. 17. The Topix was poised for its worst weekly decline since February 2016. The Nikkei 225 Stock Average dropped more than 3%, poised to enter a correction, losing more than 11% from a January high.

The S&P 500 fell into a correction on Thursday, barely over a week after setting a record high, the quickest-ever turnaround of the sort, according to data from Deutsche Bank Global Research.

The coronavirus has the potential to become a pandemic and is at a “decisive” stage, the head of the World Health Organization told reporters in Geneva. In Asia, attention is on countries outside China as new cases slow at the epicenter of the outbreak. Japan will close all schools starting Monday, and South Korean infections now top 1,700.

“We can tell that the move to hold cash is accelerating and the situation will be the same for Japanese equities,” said Nobuhiko Kuramochi, head of investment information at Mizuho Securities in Tokyo. “On top of the panic selling, it’ll be a market where we see algorithm-based selling and outflow from risk-parity funds.”

Summary

Topix -3% to 1,520.41 as of 9:30 a.m. in Tokyo
Nikkei 225 -3.2% to 21,251.36
Yen +0.1% to 109.47 per dollar after gaining 0.8% Thursday
All Topix industry groups slide; electronics biggest drag: Sony -2.7%, Keyence -3.2%, Tokyo Electron -4.2%

To contact the reporters on this story: Min Jeong Lee in Tokyo at mlee754@bloomberg.net;Ayaka Maki in Tokyo at amaki8@bloomberg.net

To contact the editor responsible for this story: Lianting Tu at ltu4@bloomberg.net