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Share dilution worries sent Japan stocks lower

Share dilution worries sent Japan stocks lower

Japan stocks fell Monday as disappointed investors punished financial names on news that the country's second-biggest bank and brokerage plan to sell new shares.
The benchmark Nikkei 225 stock average lost 93.92 points, or 1 percent, to 9,783.47. The broader Topix index fell 1.2 percent to 915.32.
The day began with a big sell-off of Daiwa Securities Group Inc., Japan's second-biggest securities company, after it said Friday that it will raise about 240 billion yen ($2.5 billion) in a public share offering.
The stock, which tumbled as much as 15 percent at one point, closed down 12.1 percent at 587 yen. The offering will expand the number of Daiwa shares outstanding by about 30 percent.
Surprised analysts questioned Daiwa's timing and intent.
"At least until the company explains its growth strategy and provides details of the actual use to which the funds raised in this capitalization will be put, it is difficult to be positive on the news," said Credit Suisse analyst Azuma Ohno in a note to clients.
The market rose in morning trading, but tumbled into negative territory in the afternoon after Bloomberg News reported that Japan's No. 2 bank, Mizuho Financial Group Inc., is preparing to issue about 600 billion yen ($6.3 billion) of shares. The sale could begin as early as this week, Bloomberg said citing two unnamed sources.
Mizuho fell 3.4 percent to 229 yen, dragging overall market sentiment lower. The bank had no comment on the report.
"It's a megabank, so its impact on the market is big," said Hideaki Higashi, an equity strategist at SMBC Friend Securities in Tokyo. "But this is more of a technical development, so it hasn't changed the underlying assumption that Japan's economy is beginning to recover."
The government's latest factory output data in the morning supported such economic hopes but did little to move the market, Higashi added. Industrial production climbed 5.9 percent in May from a month earlier in the third straight monthly gain.
In currencies, the dollar was trading at 95.36 yen from 95.25 yen late Friday. The euro stood at $1.3988 from $1.4063.


Updated : 2021-06-25 00:41 GMT+08:00