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IPOs - Asias

Nikkei succumbs to global pressure as pandemic worries resurface

TOKYO, Sept 24 (Reuters) - Japanese shares succumbed to broad selling pressure in global stocks on Thursday following worries about their high valuation, resurgent coronavirus infections and the spectre of a slowdown in budding economic recoveries worldwide.

Uncertainties over U.S. presidential elections added burden as President Donald Trump declined to commit to a peaceful transfer of power if he loses the Nov. 3 election.

“It’s not clear what is going to happen to the election. If people still have (long) positions, I suspect they will close them rather than betting on the markets hitting new highs,” said a senior trader at a major Japanese bank.

Nikkei share average lost 1.11% to 23,087.82, falling below a key support from its 25-day average at 23,217 to its lowest finish in half a month.

The broader Topix lost 1.08% to 1,626.44, with cyclicals such as steelmakers and carmakers hit the most.

Nippon Steel lost 4.1% while rival JFE Holdings tanked 6.1%. Among carmakers, Honda lost 4.2% while Subaru shed 3.0%.

Elsewhere, Sumitomo Mitsui Trust dropped 3.1%, hit by concerns about reputational damages after the Japanese company made errors in vote-counting of shareholders’ meetings it administers.

Hitachi Transport System lost 4.7% and SG Holdings fell 1.3% following a media report that the two firms will cancel capital alliance.

Investor caution was palpable with so-called quality stocks, those with steadier earnings outlook, outperforming the overall market, said Yuya Fukue, trader at Rheos Capital Works.

Among the quality stocks, endoscope maker Olympus gained 1.2% while optical products maker Hoya Corp rose 1.5% and Sysmex, a medical equipment firm, added 0.4%.

Nikkei’s losses were smaller than the 2.37% drop in U.S. S&P500, however, partly due to expectations of big re-investment flows from dividend next week.

“We have 800 billion yen ($7.59 billion) of reinvestment expected. That is big,” said Fukue at Rheos. ($1 = 105.41 yen) (Reporting by Hideyuki Sano, Editing by Sherry Jacob-Phillips and Uttaresh.V)

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