November 21, 2018 / 6:36 AM / 23 days ago

Nikkei ends lower as resource shares drag; Topix nears bear market territory

* Trading houses, steelmakers, mining shares underperform

* Nissan rises as cheap valuations attract retail investors

* Shares of Takashimaya plunge on convertible bond plan

By Ayai Tomisawa

TOKYO, Nov 21 (Reuters) - Japan’s Nikkei visited three-week lows and ended weaker on Wednesday after Wall Street’s tumble hit sentiment, while falling oil prices dragged down resource and trading-house shares.

The Nikkei share average closed 0.4 percent lower at 21,507.54 after touching 21,243.38 in early trade, the lowest since Oct. 30.

The Topix dropped 0.6 percent to 1,615.89 after falling to as low as 1,598.54. The Topix is not far from bear market territory - defined as peak-to-trough losses of more than 20 percent. When the Topix fell to 1,581.56 on Oct 26, it was 17 percent below its 2018 peak of 1,911.31 in late January.

“Major factors dragging down Japanese stocks are a sell-off in U.S. shares and concerns about weaker forecasts in Japanese corporate earnings due to worries about weak global growth,” said Hikaru Sato, a senior technical analyst at Daiwa Securities.

Underscoring investors’ risk-averse sentiment, global cyclical resource shares such as trading houses, steelmakers and mining shares underperformed.

Marubeni Corp shed 2.7 percent, Mitsubishi Corp slipped 2.3 percent, Nippon Steel and Sumitomo Metal declined 1.4 percent, JFE Holdings dropped 1.3 percent and Inpex Corp stumbled 3.3 percent.

Before bouncing on Wednesday, oil prices tumbled more than 6 percent on Tuesday in heavy trading volume, caught in a broader Wall Street sell-off that was fed by mounting concerns about a slowdown in global economic growth.

Nissan Motor Co steadied 0.4 percent from the sharp drop on Tuesday in reaction to the arrest on Monday night of chairman Carlos Ghosn.

Traders said that an immediate impact on Nissan’s bottom line was unlikely.

Nissan has cheap valuations, with its price-to-earnings ratio around 7.52 and shares trading below book value. Its dividend yield is at 5.92 percent, compared to the Nikkei’s yield at 1.98 percent.

“Nissan is one of the popular stocks with high dividend yields, and when the overall market is weak, retail investors tend to buy high dividend stocks,” said Yoshihiro Okumura, general manager at Chibagin Asset Management.

Department store operator Takashimaya Co nosedived 16 percent to be the biggest loser on the main board after it said it will issue convertible bonds. (Editing by Simon Cameron-Moore)

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