Japan’s blue chip index, Nikkei 225, plunged into correction on Monday, dragged by a selloff in chip and export-related stocks.
On Friday, the The Nikkei 225 index settled 4.05% lower, marking a 11.5% drop from its peak in December. Even on a year to date basis, the index fell 11%, marking it the worst performance since March 2020 when the stock market was hit by Covid-19 pandemic.
Out of ten biggest decliners on the Nikkei index, seven of which were chip-related stocks. Renesas Electronics Corp. and Socionext Inc. are among them and they found their stocks dropped 11.2% and 8.8%, respectively.
Besides the Nikkei 225, Topix, the broader index, also fell 3.57%, dragged down by the stock in the financial and electronic appliance segment.
Traders were offloading their shares across the region to avoid being exposed to riskier assets before April 2, the day US President Donald Trump promised to impose several reciprocal tariffs.
Tetsuo Seshimo, a portfolio manager at Saison Asset Management Co., stated that traders do not have clear detail on the ultimate outcome of the Trump administration’s policies. They worried that economic activity would be suppressed so they decided to sell their shares.
Phillip Wool, head of portfolio management at Rayliant Global Advisors Ltd, also warned that the weaker the US economy is, the more weight it will be on stocks in Japan, one of the U.S. major exporters.
