Japan Stocks Drop on Month-End Selling

Japanese stocks fell for a second session, giving up early gains, as sales to investors to take profits and rebalance positions at the end of the month overshadowed a batch of technology companies that announced positive profits.

Investors are growing concerned about more market turmoil as retail frenzy boosts market volatility and speculation of further liquidation by the affected market players.

The benchmark Nikkei index fell 1.89% to 27,663.39 points, its biggest drop since July 31, and below its 25-day moving average price. The broader Topix index fell 1.64% to 1,808.78 points.

Losses accelerated after citron Research said it would make a major announcement later in the day. They will see a short-selling hedge fund engaged in share buybacks in order to cover potential gamestop losses.

Shares of companies that have recently gained ground, such as Canon, whose stock fell 7.4%, even as the camera and printing equipment maker announced strong profit growth in the last quarter, as expected.

Chip-related companies that reported strong earnings also declined.

Advantest shares fell 1.9%, erasing 5.1% early gains, after the company raised its earnings forecast for the year ending in March, attributing this to strong demand for chip testers.

Tokyo Electron fell 4.9%, erasing a 2.4% gain after the chipmaker raised its annual forecast.

However, some companies managed to preserve the equity gains after announcing strong results. Among technology stocks, Fujitsu gained 1.5% and Shinko Electric gained 7.2%.

Nomura Real Estate rose 6.7% and Oriental Land rose 1.3%, after results showed a stronger-than-expected recovery for Tokyo Disney Park.