Tokyo stocks close lower as cronyism scandal dogs Abe

Tokyo stocks close lower as cronyism scandal dogs Abe

Tokyo: Tokyo stocks dropped on Monday with investor sentiment weighed down by political uncertainty with a cronyism scandal denting the approval rating of Prime Minister Shinzo Abe’s cabinet.

The benchmark Nikkei 225 index fell 0.90 percent or 195.61 points to close at 21,480.90, while the broader Topix index was down 0.96 percent or 16.66 points at 1,719.97.

Abe and his Finance Minister Taro Aso have been in hot water in recent weeks amid a scandal over the cut-price sale of government land to an Abe supporter to open an elementary school.

The finance ministry has admitted to altering documents related to the deal.

“There are growing voices that Abe and Aso should be held responsible,” said Masayuki Kubota, chief strategist at Rakuten Securities.

“Various polls have shown his cabinet approval rating plunging and the stable base of the Abe administration is wobbling,” he said in a commentary.

A weekend poll by the Asahi Shimbun daily found public support nosediving by 13 percentage points from a month ago to 31 percent, the lowest since Abe took power in December 2012.

Facing a grilling in a parliamentary hearing on Monday, Abe denied any involvement in the land deal or the alteration of the documents.

Toshikazu Horiuchi, a broker at IwaiCosmo Securities, said the controversy was expected to continue hurting market sentiment for now, saying: “It’s unlikely we will see the scandal disappearing tomorrow.”

Kubota at Rakuten also said another concern for the stock market was a persistently weak dollar on fears of a trade war following US President Donald Trump’s tariff plans and political uncertainty both in Japan and the United States.

The yen often draws safe-haven buying in times of uncertainty but a stronger currency hurts the nation’s exports.

The dollar was trading at 105.76 yen against 105.97 yen in New York on Friday.

Banks were lower as Mitsubishi UFJ Financial plunged 1.49 percent to 706.3 yen with Sumitomo Mitsui down 0.78 percent at 4,525 yen.

Toyota lost 0.82 percent to 6,827 yen and Honda dropped 1.06 percent to 3,639 yen, while Nintendo sank 1.36 percent to 48,320 yen with Sony down 4.22 percent at 5,144 yen.