JAPAN SHARES DOWN

REUTERS - APRIL 21, 2020 - Japanese shares dropped on Tuesday with energy-related companies taking the brunt of a collapse in oil prices, while the virus pandemic curbed any risk appetite ahead of corporate earnings.

The Nikkei share average fell 1.97% to 19,280.78, slipping further from Friday's near six-week high of 19,922. The broader Topix lost 1.15% to 1,415.89.

The loss widened on heightened geopolitical worries after CNN reported North Korean leader Kim Jong Un was gravely ill though South Korean and Chinese sources cast doubt.

Companies with exposure to the oil market were in focus after oil prices grabbed headlines with the front-month May U.S crude futures contract turning negative overnight.

"Fall in oils prices raised concerns about more bankruptcies in the U.S. shale oil industry. In Japan too, refiners and resource-related companies earnings will be hit," said Masayuki Kubota, chief strategist at Rakuten Securities.

Energy plant engineering firm JGC dropped 6.3% while Chiyoda Corp fell 3.5%.

Trading houses, for which resource operations are a core part of business, were another victim.

Mitsubishi Corp lost 1.4% while Mitsui Co shed 2.3%. Itochu Corp fell 2.0% while Marubeni dropped 3.8% to a four-year low.

Lower oil prices offered limited comfort for companies that would normally benefit from them, such as airlines, given the sheer scale of demand destruction.

Japan Airlines fell 1.6% while rival ANA Holdings slipped 0.3% after cutting its profit estimates for the year that ended on March 31 to 27 billion yen ($250.9 million) from the previous estimate of 94 billion yen. Its earnings announcement is scheduled on April 28.

Cyclical shares such as semi-conductor related companies were also under pressure as investors continued to fret over the impact from the novel coronavirus pandemic. Nidec dropped 5.3%.

The index of Mothers start-up market dropped 4.2% after a strong bull run over the past two weeks, with on-line flea market app operator Mercari falling 8.7%.

On the main board, decliners outnumbered gainers by ratio of 74 to 26.

Among gainers, Takara Bio Inc rose 10.4% after a media report that it would build a mass production system for the coronavirus vaccine it is developing.

Nintendo Co Ltd gained 0.2% following a media report the game company was considering increasing the production of its popular "Switch" game console, demand for which has risen after lockdowns in many countries.

Defensive shares were still in favour with food company Meiji Holdings rising 2.4% and toiletry goods maker Kao Corp gaining 1.1%.

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