By Nick Gentle and Inyoung Hwang
March 16 (Bloomberg) -- The president of the Tokyo Stock Exchange appealed for calm after an earthquake and nuclear accident triggered the biggest two-day decline in Japanese stocks since 1987.
Investors and traders should ?respond in a calm and orderly manner? exchange President Atsushi Saito said yesterday, after the Nikkei 225 Stock Average plunged 11 percent, bringing its loss since yesterday?s open to 16 percent. The Nikkei and broader Topix index each fell as much as 14 percent, the biggest intraday retreats since the October 1987 stock market crash.
Saito made his statement a day after Bank of Japan Governor Masaaki Shirakawa?s pledge to secure financial stability failed to halt the rout, spurred by concern the nuclear accident may cripple the nation?s economy. Shares in the Europe and U.S. pared earlier declines, with the Standard & Poor?s 500 Index falling 1.1 percent after sliding 2.7 percent.
?Saito?s call for a quiet period is a thoughtful approach,? said Richard Torrenzano, chief executive officer of the Torrenzano Group, who was spokesman for the New York Stock Exchange during the 1987 crash. ?We?ve seen stock markets in panic modes before. You have the economy, the companies, the investors who need to assess the market. There are a lot of very big things at stake here.?
Lowest Since 1983
Japanese stocks are within 10 percent of erasing all the gains from the bull market that began in March 2009 after the country?s biggest earthquake on record sparked the worst two-day plunge since 1987.
An 8.6 percent drop in the Topix to less than 700.93 would leave it at the lowest level since December 1983, a year after Sony Corp. unveiled the world?s first mass-produced compact disc player. The measure of 1,666 Japanese companies came within 4 percent of wiping out the bull market advance yesterday after nuclear power plant explosions raised concern about leaking radiation and sent the Topix down up to 14 percent.
Japanese stocks entered a bear market yesterday -- with the Topix extending its drop since April 15, 2010, to more than 20 percent -- after losses from the past three days erased more than $680 billion in market value from companies in the index, according to data compiled by Bloomberg. The gauge now trades at 0.91 times the value of net assets for its companies, the lowest since March 2009.
?It?s a sanity check,? said Marc Harris, co-head of global research at RBC Capital Markets in New York. ?It?s basically a reset button that shows this is a panic, and when the market has a panic like this, the actual level has very little to do with the actual earnings and economic outlook.?
Lehman Losses
The Topix dropped 9.5 percent to 766.73 yesterday, bringing its slump since the day before the March 11 quake to 18 percent. The last time the index?s level was this low, on March 19, 2009, it was six months after the collapse of New York-based Lehman Brothers Holdings Inc., and the global economy was contracting for the first time since World War II.
Global stocks slumped yesterday as Japan?s Prime Minister Naoto Kan said the danger of further radiation leaks increased at the nuclear facility, located 135 miles (217 kilometers) north of Tokyo in Fukushima. The March 11 quake and subsequent tsunami led to what Kan called the country?s worst crisis since World War II.
?They may very well have to close the Tokyo Stock Exchange for a period of time or alter it in some way,? Torrenzano said in a telephone interview. ?They may shorten the hours, do something to address the impending disaster of the nuclear reactor. Everyone around the world will try to be understanding and thoughtful about that.?
Futures Halted
The Tokyo Stock Exchange halted trading of Topix index futures twice after prices plunged at 12:31 p.m. and at 12:50 p.m., according to Masanori Onda, an official at the bourse?s derivatives department. The exchange halted arbitrage trading of Topix stocks after the index fell more than 100 points. The exchange said it would lift the halt when the gauge rose above 776.96.
The total number of shares traded on the Tokyo Stock Exchange?s first section reached a record for a second day. More than 5.77 billion shares changed hands, exceeding yesterday?s 4.88 billion shares.
--With assistance from Akiko Ikeda and Toshiro Hasegawa in Tokyo, Lynn Thomasson in Hong Kong and Nikolaj Gammeltoft in New York. Editors: Stephen Kleege, Nick Baker
To contact the reporters on this story: Nick Gentle in Hong Kong at ngentle2@bloomberg.net; Inyoung Hwang in New York at ihwang7@bloomberg.net
To contact the editors responsible for this story: Nick Gentle at ngentle2@bloomberg.net; Nick Baker at nbaker7@bloomberg.net
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