Tokyo (AFP) – Tokyo’s benchmark stock index nosedived almost eight percent Friday as Britain’s decision to leave the European Union sparked an avalanche of selling and wild swings on currency markets.
The Nikkei 225 plunged 7.92 percent, or 1,286.33 points, to 14,952.02 in its biggest one-day fall since Japan’s 2011 quake-tsunami disaster.
The broader Topix index of all first-section shares dived 7.26 percent, or 94.23 points, to 1,204.48.
Japan’s biggest equity market had opened in positive territory on bets that Britain would choose to remain in the 28-nation bloc.
But those hopes quickly faded as early poll results suggested the ‘Leave’ camp would prevail, sending the pound into a spiral and pushing the yen to its highest in more than two years — a negative for Japanese shares — as investors flocked to safer assets.
“Things have gone wild,” said Hiroaki Hiwada, a strategist at Toyo Securities. “I’ve never seen a market like this before.”
At an emergency news briefing, Japan’s Finance Minister Taro Aso pledged that Tokyo was ready to adopt strong measures to address wild volatility on financial markets.
“We are extremely worried about the risks to the global economy as well as financial and foreign exchange markets,” Aso told reporters.
“We will respond firmly when necessary,” he added, without elaborating.
Recently, Japanese officials, including Aso, have been warning over the yen’s rise, which is threatening profits at Japan Inc and dealing a blow to Prime Minister Shinzo Abe’s growth blitz, dubbed Abenomics.
The unit’s surge – it briefly breached 100 against the dollar level on Friday — sparked speculation that a market intervention to weaken the currency was imminent.
However, an intervention could put Japan on a collision course with its G20 counterparts, who have agreed to hold off such moves.
The Bank of Japan, meanwhile, said it was ready to lean on a currency swap agreement it has with other major central banks to supply liquidity to “ensure the stability of financial markets”.
Prime Minister Shinzo Abe was set to hold a meeting with top officials later Friday.
The vote to leave the EU could have significant consequences for more than 1,000 Japanese firms that operate in Britain — many of which see it as a staging point for dealing in Europe.
Japanese exporters were among the main losers on Friday, as the stronger yen sharply hit demand for their shares.
Toyota at one point lost more then 10 percent before paring some losses to end 8.66 percent lower at 5,240 yen.
Sony dropped 8.00 percent to 2,775.5 yen, banking giant Mitsubishi UFJ Financial Group tumbled 8.56 percent to 470 yen, while factory robotics maker Fanuc shed 6.65 percent to 15,500 yen.
Uniqlo operator Fast Retailing, a market heavyweight, tumbled 10.38 percent to 26,295 yen.
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