TOKYO (Reuters) – The Japanese Nikkei fell to a three-week low on Tuesday as a decline in Nasdaq shares dragged down the names of Japanese technology, while Nissan Motor dropped the news of the arrest and dismissal of the president Carlos Ghosn.
People are reflected in a stock quote that shows the share price of Nissan Motor Co outside a brokerage firm in Tokyo, Japan, November 20, 2018. REUTERS / Toru Hanai
The average of Nikkei shares fell 1.1% to 21,583.12, the lowest closing level since October 31st.
Nissan Motor Co was the most traded headline by revenue and plunged 5.5 percent to finish at 950.7 yen, the low since August 2016, after Nissan said Ghosn had been arrested for alleged financial misconduct and that it would was fired by the council this week.
Nissan said that an internal investigation, triggered by a whistleblower by an informant, revealed that Ghosn committed an offense including the personal use of the company's money and underestimated his earnings for years.
"This is shocking," said Toru Ibayashi, executive director of Wealth Management at UBS Securities Japan.
"Underestimating his company salary, he practically deprived Nissan's shareholders of the opportunities to judge whether the sum of his salary was appropriate, which will enable investors to check whether Japanese corporate governance works."
While the market is under shock, some traders have said that the downside of Nissan's share price may be limited.
"This is a big corporate governance problem, but it's not something that could affect your earnings," said Makoto Kikuchi, CEO of Myojo Asset Management. "With its trading in securities below the carrying amount, it makes sense that some long-term investors are attracted to its low-cost valuations."
Nissan supplier Nissan Shatai lost 2.5% and Nissan dealer Tokyo Sales Holdings stumbled by 4.1%.
Also Mitsubishi Motors, another member of the Franco-Japanese partnership, has plunged 6.9%. Mitsubishi said he would also remove Ghosn as president.
Tuesday's losers included Apple Inc vendors after iPhone maker actions fell overnight. Murata Manufacturing lost 3.5%, TDK Corp and Kyocera Corp lost 1.9% and 1.6% respectively.
Chip-equipment manufacturers were also sold, with Tokyo Electron down 1.8% and Advantest Corp down 2.7%.
The larger Topix lost 0.7 percent to 1.625.67.