Nikkei falls amid lockdown fears, sees worst quarter since late 2008

SYDNEY, March 31 (Reuters) – Japanese stock benchmark Nikkei dropped on Tuesday on growing fears that Tokyo could go into its first-ever lockdown as the global coronavirus crisis showed no signs of abating.

The Nikkei average fell 0.9% to 18,917.01, well below 19,500, the average cost of the Bank of Japan’s massive stock purchase since 2013.

The index was down 10.5% for the month, its biggest monthly decline since May 2010, and down 20.0% year-to-date, its worst quarter since late 2008.

The Nikkei’s volatility index, a measure of investors’ volatility expectations based on option pricing and considered to be a fear gauge, slid 11.4% to 49.41, moving away from a nine-year peak of 60.86, hit on March 16.

Market sentiment got some relief in the morning from Chinese factory activity data, which unexpectedly expanded in March after contracting sharply to a record low in February. But the momentum didn’t last long.

Analysts said some speculators sold stock futures in the afternoon, assuming the Bank of Japan would refrain from buying stocks on Tuesday.

However, many institutional investors were reluctant to take new positions on the last day of the fiscal year, and also as they were unsure if and when Japan would declare a national emergency and implement lockdown measures.

The broader Topix declined 2.3% to 1,403.04, with all but two of the 33 sector sub-indexes on the Tokyo Stock Exchange finishing in negative territory.

Among bluechip stocks, Toyota Motor Co Ltd lost 4.4%, Mitsubishi UFJ Financial Group Inc shed 5.4%, and NTT Docomo Inc fell 2.8%.

As Tokyo was seen moving closer toward a potential citywide lockdown over the coronavirus pandemic, shares of remote work-related firms bucked the overall market weakness.

Web/TV conferencing services provider V-cube Inc surged 10.0%, while groupware maker Cybozu Inc soared 9.2%.

Fujifilm Holdings Corp advanced 2.2% after domestic media reported the company planned to increase production of its Avigan anti-flu drug, also known as favipiravir.

Fujifilm’s stocks climbed 6.0% on Monday after Prime Minister Shinzo Abe said the government would push for approval of the drug as a potential coronavirus treatment.

Elsewhere, JSR Corp jumped 8.0% as U.S. activist ValueAct Capital said it has acquired over 16.5 million shares, more than a 7% stake, of the Japanese chip and display materials maker. (Reporting by Tomo Uetake; Editing by Vinay Dwivedi)

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