Asia Tech Stocks Dive While Ghosn Arrest Slams Nissan, Mitsubishi

In Tokyo, Japan Display collapsed more than 10 percent and has now lost around a third of its value over the past week

Asia Tech Stocks Dive While Ghosn Arrest Slams Nissan, Mitsubishi - Surge Zirc
The arrest of Carlos Ghosn, who is credited with rescuing Nissan, sent shares in the firm plunging with Mitsubishi in Tokyo/Photo credit: afp

Technology firms led a sell-off across Asian markets Tuesday on fresh concerns about demand for Apple’s iPhones, while Japanese car giants Nissan and Mitsubishi plunged on news chairman Carlos Ghosn had been arrested over alleged financial misconduct.

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After a brief couple of days of stability, panic returned to trading floors following a report that the US titan had slashed production of its popular handset.

That comes just a week after a supplier suggested the firm had cut orders, fanning speculation the latest incarnation of the gadget is not selling as much as hoped.

Apple collapsed four percent in US trade with Facebook, Amazon, Google parent Alphabet and Microsoft each diving three percent or more.

The losses filtered through to Asia, where Apple suppliers were also in trouble.

In Tokyo, Japan Display collapsed more than 10 percent and has now lost around a third of its value over the past week, while Alps Electric fell 1.8 percent. Among other tech firms Sony shed 3.1 percent and in Hong Kong market heavyweight Tencent shed 3,3 percent while Sunny Optical Technology lost 2.4 percent.

Taiwan Semiconductor Manufacturing Company shed 1.8 percent in Taipei and Delta Electronics was off 1.6 percent.

Broader markets were also well down as investors fret over a number of issues, with attention now turning to next week’s G20 summit in Argentina, where Donald Trump is expected to meet Chinese President Xi Jinping to talk trade.

There had been some hope that the world’s top two economies could find a resolution to their painful tariffs row but a clash of words at the weekend between Xi and Trump’s Vice President Mike Pence has muddied the waters.

China-US deal ‘unlikely’

“A comprehensive trade agreement at the G20 that rolls back the tariffs still looks unlikely,” warned Bank of Singapore currency strategist Sim Moh Siong. “But a constructive US-China statement, agreement to restart talks and a tariff pause appear to be emerging possibilities.

“The most positive outcome at G20 would be the White House ‘stopping the clock’ on the now-scheduled ramp-up in tariffs from a 10 percent rate to a 25 percent rate, moving that date from 1 Jan 2019 to a later date.”

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This, he added, would provide some stability to the Chinese yuan and under-pressure Asian currencies.

Hong Kong fell two percent, Shanghai ended off 2.1 percent, while Sydney, Seoul, Singapore, Wellington, Bangkok and Taipei also saw sharp losses.

Tokyo was down 1.1 percent.

Nissan lost 5.5 percent and Mitsubishi sank 6.9 percent as they prepared to sack Ghosn after it emerged he had been taken into custody as detectives looked into claims he under-reported his income for years.

Ghosn has long been a major player in the car industry and is credited with resurrecting the once-troubled Nissan, which he allied with Mitsubishi and France’s Renault.

Renault’s share price eased 2.3 percent in early Paris trade, extending Monday’s eight percent dive.

Nissan CEO Hiroto Saikawa insisted the partnership among the three “will not be affected by this event” but had no details on how the other firms would respond, or who might succeed Ghosn.

Demian Flowers, head of auto equity research at Commerzbank, said with Ghosn likely out, the three firms could see three separate CEOs with their own objectives.

On currency markets, the pound held its own as British Prime Minister Theresa May looks to sell her Brexit deal to her own fractious party ahead of a crucial vote in parliament next month.

However, a threatened rebellion and vote of confidence in her leadership appears to have stalled, removing some uncertainty.

London started Tuesday down 0.4 percent, while Paris shed 0.6 percent and Frankfurt slipped 0.8 percent.

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Key figures around 0820 GMT

Tokyo – Nikkei 225: DOWN 1.1 percent at 21,583.12 (close)

Hong Kong – Hang Seng: DOWN 2.0 percent at 25,840.34 (close)

Shanghai – Composite: DOWN 2.1 percent at 2,645.85 (close)

London – FTSE 100: DOWN 0.4 percent at 6,975.36

Euro/dollar: UP at $1.1457 from $1.1452 at 2200 GMT

Pound/dollar: UP at $1.2854 from $1.2850

Dollar/yen: DOWN at 112.53 yen from 112.54 yen

Oil – West Texas Intermediate: DOWN 12 cents at $57.08 per barrel (new contract)

Oil – Brent Crude: DOWN 22 cents at $66.57 per barrel

New York – Dow: DOWN 1.6 percent at 25,017.44 (close)

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