SYDNEY, May 22 (Reuters) - Japanese stocks slipped on Friday, as investors maintained a cautious stance amid the mounting Sino-U.S. friction and awaited policy cues from China’s parliamentary meeting, though the benchmark was poised for a weekly gain.
The benchmark Nikkei average edged down 0.4% to 20,462.11 by the midday break, after flitting between positive and negative territories. The index has gained 2.1% so far this week, set for its first weekly rise in two.
In Beijing, about 3,000 delegates gathered on Friday to take part in the annual gathering of National People’s Congress, China’s largely rubber-stamp parliament, to discuss political and economic policy in the backdrop of escalating tensions with the United States.
Global equities pulled back after Beijing was set to impose new national security legislation on Hong Kong. The move drew a warning from U.S. President Donald Trump, who said the United States would react “very strongly” against it.
The retreat from riskier assets followed Beijing’s decision with Hong Kong’s Hang Seng index dropping 3.8%.
“There is no doubt that corporate earnings in Japan are going to be challenging. So, this week, investors have been caught between economic reality and U.S.-China trade and political tensions,” said Soichiro Matsumoto, chief investment officer Japan at Credit Suisse.
The broader Topix slipped 0.5% to 1,483.78 by the midday recess, with all but four of the 33 sector sub-indexes on the Tokyo exchange trading lower.
Highly cyclical iron and steel, mining and non-ferrous metals were the three worst-performing sector sub-indexes on the main bourse.
The Nikkei’s heavyweight SoftBank Group Corp advanced 3.2% as the tech conglomerate said it plans to sell 5% of its domestic telco SoftBank Corp as part of a programme to raise $41 billion through asset sales. SoftBank Corp shed 3.8% on the announcement.
Bucking the overall sombre mood, the index of Mothers , a startup market in the Tokyo Stock Exchange, edged up 0.5% to hit a fresh one-year high. In the previous session, the index touched its highest since May 2019.
Japanese bio-pharma startup Anges, which is planning to develop a COVID-19 vaccine, climbed as much as 3.8%.
Investors largely shrugged off headlines that the Bank of Japan has decided to launch a new lending facility that aims to channel more funds to small and midsize businesses suffering from the pandemic.
Reporting by Tomo Uetake; Editing by Sherry Jacob-Phillips