Nikkei ends at 3-week low after Ghosn arrest shocks market, Nasdaq fall drags tech stocks

  • Reuters
  • Stock Market News
Nikkei ends at 3-week low after Ghosn arrest shocks market, Nasdaq fall drags tech stocks
Credit: © Reuters.

* After Ghosn arrest investors wonder if Japan's corporate governance working - analyst

* Nissan's share price drop may be limited - fund manager

* Mitsubishi Motors sinks 6.9 pct

* Suppliers weak after Apple shares fall overnight

By Ayai Tomisawa

TOKYO, Nov 20 (Reuters) - Japan's Nikkei fell to a three-week low on Tuesday as a drop in Nasdaq shares dragged down Japanese tech names, while Nissan Motor tumbled on news of Chairman Carlos Ghosn's arrest and dismissal.

The Nikkei share average .N225 ended 1.1 percent lower to 21,583.12, the lowest closing level since October 31.

Nissan Motor Co 7201.T was the most-traded stock by turnover and tumbled 5.5 percent to end at 950.7 yen, its lowest since August 2016, after Nissan said Ghosn had been arrested over alleged financial misconduct and would be fired from the board this week. said an internal investigation, triggered by a tip-off from a whistleblower, had revealed that Ghosn engaged in wrongdoing including personal use of company money and under-reporting his earnings for years.

"This is shocking," said Toru Ibayashi, executive director of Wealth Management at UBS Securities Japan.

"By under-reporting his corporate salary, he basically deprived Nissan's shareholders of opportunities to judge if the amount of his salary was appropriate. This incident will make investors review if Japanese corporate governance is working."

While the market is in shock, some traders said that the downside for Nissan's share price may be limited.

"This is a big corporate governance issue, but it's not something that would affect its earnings right away," said Makoto Kikuchi, chief executive of Myojo Asset Management.

"With its stock trading way below its book value, it makes sense that some short-term investors are attracted to its cheap valuations."

Nissan supplier Nissan Shatai 7222.T dropped 2.5 percent and dealer Nissan Tokyo Sales Holdings 8291.T stumbled 4.1 percent.

Mitsubishi Motors 7211.T , another member of the Franco-Japanese partnership, also plunged 6.9 percent. Mitsubishi said it would also remove Ghosn as its chairman.

Tuesday's losers included Apple Inc AAPL.O suppliers after the iPhone maker's shares dived overnight. Murata Manufacturing 6981.T shed 3.5 percent, TDK Corp 6762.T and Kyocera Corp 6971.T dropped 1.9 percent and 1.6 percent, respectively.

Chip-equipment makers were sold as well, with Tokyo Electron 8035.T falling 1.8 percent and Advantest Corp 6857.T sliding 2.7 percent.

The broader Topix .TOPX shed 0.7 percent to 1,625.67.

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