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A massive selloff on the Tokyo Stock Exchange wiped out some 23.5 trillion yen ($287 billion) from the market's value on Monday with investors dumping stocks as the country recoiled from a devastating earthquake and struggled to avert nuclear disaster.
The selloff triggered record volumes and slashed the market's value to roughly 289 trillion yen.
The Nikkei average tumbled 6.2%, its biggest decline in a single day since October 2008, and more than 4.88 billion shares changed hands on the exchange's first section, the highest number since World War 2.
Volume was pushed up by window-dressing selling by domestic institutional investors for the March 31 financial year-end and by domestic investment trusts and anxious retail buyers, while long-term foreign players who have piled into Japanese shares since November also rushed for the exit, market players said.
"It's the end of the business year for Japanese institutions. They've been net sellers of Tokyo stocks anyway, and in March they traditionally lock in profits for the year, so much of today's selling pressure likely came from them," said Mitsuhsige Akino, a fund manager at Ichiyoshi Investment Management.
"On the other hand, foreigners had bought over 2.75 trillion yen worth of Japan stocks since November, pushing the Nikkei several% higher, so no wonder they tried to trim their losses or lock in as much profit as possible today, and that bolstered trading volume" said Akino.
Fears of more quake aftershocks and further repercussions from damaged nuclear reactors were cited as the most important factors behind the sell-off.
"Domestic investment trusts and funds are dumping everything today. Sell orders for tens of billions of yen were detected," said an equities trader at a Japanese domestic institutional investor, who declined to be quoted by name.
Individual investors, who often trade in smaller stocks on the TSE's Mothers section for startups, likely sold even more aggressively then the big players on the Nikkei, traders said.
The Mothers market tumbled 17.2%, with social networking site Mixi Inc. and Japan's third-biggest airline Skymark Airlines Inc both down around 18%.
" Will 2007-2008 food crisis repeat itself this year?? "..
" for years we have warned that what is needed is more productivity and investment in agriculture " ...
Surging global prices of basic foodstuffs raise the risk that the food crisis of 2007-2008 in developing countries will be repeated, the head of the UN’s Food and Agriculture Organization said on Monday.
A jump in oil prices and the fast recent drawdown in global stocks of cereals could herald a supply crisis, FAO Director General Jacques Diouf told Reuters in an interview during a visit to the United Arab Emirates.
"The high prices raise concern and we’ve been quickly drawing down stocks," he said. "For years we have warned that what is needed is more productivity and investment in agriculture."
The most recent UN Food Price Index showed prices have risen to the highest levels since at least 1990, when the index began.
Diouf said until recent months, global stocks of cereals were at much healthier levels than the dwindling supplies that set off a crisis in 2007 and 2008.
Last July, inventory levels were a healthy 100 million tonnes higher than during that crisis, but rapid economic growth in developing countries, and a return to growth in highly industrialized economies, has led to new drawdowns.
A number of countries in north Africa and the Middle East have made big grain purchases to head off the sort of unrest, partly fuelled by food prices, which has toppled the leaders of Tunisia and Egypt.
South Korea is looking to build a strategic grain reserve and is planning to buy cargoes of corn and another staples, joining similar efforts by other Asian nations worried about high food prices and social unrest.
"It is a rational thing to do, to cover yourself, Diouf said.
The recent surge in oil prices, which rose to nearly $120 per barrel in late February, is contributing to higher food prices that may crimp developing countries’ ability to cover food import needs, as it raises the price of both transportation and agricultural inputs, Diouf said.
The FAO has been advising developed countries to re-examine their biofuels strategies — which include large subsidies — since these have diverted 120 million tonnes of cereals away from human consumption to convert them to fuels.
"We’ve been advising member countries to revisit these policies" Diouf said. "Relying on more renewable energy does not mean you have to make more biofuels."
Diouf said avoiding a return to food crisis hinges on crop yields in the next harvest season, as well as how economic growth impacts demand. But he also said rising food prices and oil prices could have a detrimental effect on growth.
It was too early to determine whether Japan’s recent earthquake and tsunami will have any effect on global supply or demand of agricultural products, Diouf added.
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