Tokyo stocks fall on concerns of Huawei ban impact

May 23, 2019 – Tokyo stocks dropped today as electric part suppliers met selling on concerns that their businesses could be adversely affected by U.S. sanctions on China’s Huawei Technologies Co.

The 225-issue Nikkei Stock Average ended down 132.23 points, or 0.62 percent, from yesterday at 21,151.14. The broader Topix index of all First Section issues on the Tokyo Stock Exchange finished 5.63 points, or 0.36 percent, lower at 1,540.58.

Decliners were led by mining, marine transportation and electric appliance issues.

Shares were weak throughout the day as investors grew worried over how Japanese electronic component makers will be affected by the loss of business with Huawei, one of the world’s largest sellers of base stations for wireless networks and smartphones, amid the escalating trade war between the United States and China.

“Investors unloaded shares of electric parts makers as they started to realize those companies will suffer a decline in sales and will revise down their earnings projection when releasing mid-term earnings results,” said Norihiro Fujito, senior investment strategist at Mitsubishi UFJ Morgan Stanley Securities Co.

Panasonic Corp. has decided to halt the supply of components to Huawei that would run counter to the U.S. economic sanctions, while other leading makers of electronic parts such as Kyocera and Murata Manufacturing Co. have said they are paying close attention to developments.

The U.S.-China trade spat is showing no signs of ending, with media also reporting that Washington was considering blocking video surveillance giant Hangzhou Hikvision Digital Technology Co. and several other Chinese firms from buying U.S. technology.

“Amid a lack of buying cues, the uncertainty over the ongoing trade conflict weighed on the market,” said Maki Sawada, vice president of the investment research and investor services department at Nomura Securities Co.

On the First Section, declining issues outnumbered advancers 1,258 to 783, while 100 ended unchanged.

Among Huawei suppliers, TDK tumbled 520 yen, or 6.5 percent, to 7,450 yen, Murata Manufacturing sank 132 yen, or 2.9 percent, to 4,454 yen and Panasonic fell 8.00 yen, or 0.9 percent, to 896.60 yen.

SoftBank Group plunged 565 yen, or 5.3 percent, to 10,090 yen, following reports that U.S. Justice Department staff recommended blocking a proposed merger deal between T-Mobile US Inc. and Sprint Corp. — a SoftBank unit — citing sources familiar with the matter.

Trading volume on the main section fell to 1,155.42 million shares from Wednesday’s 1,203.34 million shares.

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