Japan’s Nikkei Ends Lower as Chip Shares Fall amid Rising US Yields

Reuters

9:30 JST, September 27, 2023

TOKYO, Sept 26 (Reuters) – Japan’s Nikkei share average ended more than 1% lower on Tuesday, dragged by declines in heavyweight chip-related shares, but losses were limited as investors bought value stocks for dividend payout rights.

The Nikkei index .N225 closed down 1.11% at 32,315.05.

“Growth shares weakened amid concern about rising U.S. Treasury yields,” said Takehiko Masuzawa, trading head at Phillip Securities Japan.

U.S. Treasury yields extended rises, hitting their highest levels since October 2007 in Asian trading on expectations of the U.S. Federal Reserve likely keeping interest rates at higher levels for longer than initially anticipated.

Chip-making equipment maker Tokyo Electron 8035.T slumped 3.7% to become the Nikkei’s biggest drag. Chip-testing equipment maker Advantest 6857.T lost 2.24%.

The broader Topix .TOPX fell 0.57% to 2,371.94, a smaller slide than the Nikkei as investors bought value stocks set to go ex-dividend.

Investors need to buy stocks by the next session to get dividend payout rights for companies that count September as the end of their half-year.

“While gains in value stocks supported the market as investors bought stocks with higher dividend payouts,” Masuzawa said.

Value shares see slower growth but tend to pay higher dividends to attract investors, while growth stocks tend to get hurt by higher interest rates as their potential lies in future cash flows.

The drug sector .IPHAM.T lost 1.35% to become the worst-performing sector among 33 industry sub-indexes on the Tokyo Stock Exchange.

Machinery makers .IMCHN.T slipped 1.22% and electronic machinery makers .IELEC.T lost 1.18%.

Shipping firms .ISHIP.T gained 1.62% to become the top performer among the industry groups, while the banking sector .IBNKS.T gained 1.13% and the insurance sector .IINSU.T rose 1.08%.

Japan Exchange Group 8697.T rose 2.39% after the operator of the Tokyo Stock Exchange raised an annual net profit forecast.