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Stocks

Japan auto stocks dented by renewed protectionism fears

Once-popular shares shunned by investors after Trump's outbursts

| Japan

TOKYO -- Automakers went into reverse on the stock market here Tuesday following U.S. President Donald Trump's sharp turn toward protectionism.

Toyota Motor shares lost 2% in trading, while Mazda Motor, Honda Motor and Subaru maker Fuji Heavy Industries also sank. Toyota has slid 4% since the end of last year, while Mazda has tumbled 10% during the same period.

The Nikkei Stock Average slipped 0.55% to end at 18,787.99, a second straight losing session.

"Selling that appears to be for profit taking is beginning to stand out," said Yukio Ikehata at Daiwa Securities. The yen turned soft after the November presidential election in the U.S., which prompted international investors to snap up Japanese auto stocks based on rosier earnings speculations. Nowadays, they are taking more of a wait-and-see approach.

The yen-fueled market upturn that continued to the start of this year is slowly shifting due to Trump's statements. Japan's currency appreciated Tuesday to as far as the mid-112 range against the dollar, a level not seen in roughly two months.

"There is a chance that Mr. Trump will say something unfavorable to Japanese companies," said Kazuyuki Terao at Allianz Global Investors Japan. "It will be difficult to purchase automobile stocks for the time being."

The market's optimism for infrastructure spending, tax cuts and other policies stated by Trump has receded in favor of caution concerning the protectionist route the new president is taking, starting with the U.S. exit from the Trans-Pacific Partnership trade pact.

"Even if earnings outlooks for this fiscal period are being upgraded, automobile stocks will be top heavy as long as uncertainties over trade policies remain in place," predicts Masafumi Oshiden at BNY Mellon Asset Management Japan.

(Nikkei)

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