By V. Phani Kumar, MarketWatch
HONG KONG (MarketWatch) — Japanese stocks swooned in volatile trading action Wednesday after Prime Minister Shinzo Abe’s blueprint to spur long-term economic growth fell short of expectations.
Most other regional markets declined after a weak lead from Wall Street overnight that kept alive concerns the Federal Reserve may taper its bond purchases, with Australian stocks sliding after the nation’s first-quarter growth came in below estimates.
In Japan, the Nikkei Stock Average /zigman2/quotes/210597971/delayed JP:NIK -0.23% rose more than 1% as Abe began his much-anticipated speech, but staged a swift reversal within minutes before ending the session 518.89 points, or 3.8%, lower at 13,014.87. The decline was the fifth time in the last two weeks when the Nikkei fell more than 3% in a single day.
The dollar /zigman2/quotes/210561789/realtime/sampled USDJPY +0.2241% also charted a similarly volatile course, rising as high as ¥100.45 before sliding back to ¥99.57 by the time the stock market closed.
The sell-off came as Abe’s blueprint revealed plans to attract foreign funds, boost investment and wages, and revamp the structure of agricultural land. He also announced a proposal to allow the nation’s massive pension funds to increase their equity allocation.
“The market will be looking to hear more about his comments urging Japan’s public pension funds to increase their investments in equities and overseas assets,” said Stan Shamu, a strategist at IG Markets.
“The comments made by Abe today were not really a game-changer and disappointed a market which seems to have been positioned for a USD/JPY and Nikkei rally,” he added.
Power utilities dived as Abe pledged to restart shuttered nuclear plants in the country after ensuring their safety. He also announced plans to liberalize the retail electricity market, separate the distribution and transmission businesses, and boost capital spending in utilities.
Tokyo Electric Power Co. /zigman2/quotes/202771076/delayed JP:9501 +2.61% /zigman2/quotes/205839055/delayed TKECY -5.07% plunged 16.3%, Tohoku Electric Power Co. /zigman2/quotes/200823070/delayed JP:9506 +1.67% /zigman2/quotes/210494824/delayed TEPCY -12.59% slumped 9.1% and Kansai Electric Power Co. /zigman2/quotes/200592152/delayed JP:9503 +1.95% /zigman2/quotes/200834682/delayed KAEPY -1.42% plummeted 9.2%.
Several exporters took a beating on the yen’s strength. Mitsubishi Motors Corp. /zigman2/quotes/202404490/delayed JP:7211 +2.89% /zigman2/quotes/200876874/delayed MMTOF -0.70% skidded 5.7%, Fast Retailing Co. /zigman2/quotes/200663563/delayed JP:9983 -3.39% /zigman2/quotes/208569095/delayed FRCOF -6.51% sank 9.5%, Trend Micro Inc. /zigman2/quotes/206023532/delayed JP:4704 +0.39% /zigman2/quotes/205788499/delayed TMICY -0.85% lost 8.2% and Sharp Corp. /zigman2/quotes/203224600/delayed JP:6753 +4.05% /zigman2/quotes/200401218/delayed SHCAY +0.66% gave up 7.3%.
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Sony Corp. /zigman2/quotes/201361720/delayed JP:6758 +1.54% /zigman2/quotes/208567357/composite SNE -2.56% lost 5%, failing to benefit from a Nikkei newspaper report that it plans to begin selling e-books for Apple Inc.’s /zigman2/quotes/202934861/composite AAPL -1.58% iPad and iPhone in Japan, starting as early as the second half of the current financial year.
Other regional markets
Elsewhere in the region, the Shanghai Composite /zigman2/quotes/206600939/delayed CN:000001 -2.53% eased 0.1% and South Korea’s Kospi /zigman2/quotes/210598069/delayed KR:180721 -0.57% gave up 1.5%. Hong Kong’s Hang Seng Index /zigman2/quotes/210598030/delayed HK:HSI -0.47% ended 1% lower, for its fifth decline in six trading days.
The losses came in the wake of an overnight decline on Wall Street, amid lingering worries the Fed would downsize its monthly bond purchases.
“U.S. Fed tapering fears are likely to be felt for several months, and this is likely to see ebbs and flows in markets,” said Matthew Sherwood, head of investment market research at Perpetual.