March 13, 2020 / 7:47 AM / 24 days ago

Nikkei slumps to over 3-year low as market panic deepens; REITs pounded

* Nikkei down 6% on day, 16% on week on panic selling

* REITs dive 10.5% as bond proxy buying wound back

* Japan shares now trade at 80% of book value

By Hideyuki Sano

TOKYO, March 13 (Reuters) - Japan's Nikkei share average tumbled to more than three-year lows on Friday as investors rushed out of stocks and real estate funds on fears the global coronavirus pandemic will bring a global recession and also scupper the Tokyo Olympics.

The Nikkei lost 6.08%, its biggest daily fall since 2013, to 17,431.05, a trough last seen in November 2016. On the week, it sank 15.99%, its second worst week ever after a 24.33% fall in early October 2008.

"It feels like panic. Investors are selling even assets that should not be largely affected by the coronavirus, ignoring all the fundamentals," said Takuya Hozumi, global investment strategist at Mitsubishi UFJ Morgan Stanley Securities.

Selling mounted as investors have little idea now on how much the global economy will slump as the coronavirus spreads, forcing many governments to impose more restrictions on daily life, analysts said.

The fear grew markedly after U.S. President Donald Trump on Wednesday imposed restrictions on travel from Europe to the United States while offering little in the way of measures to support consumption.

"With so many restrictions on people's moves, this will be a man-made recession. If governments stop human moves to such an extent, they need economic safety nets too," said Hiroshi Watanabe, senior economist at Sony Financial Holdings.

Watanabe said the Nikkei's current levels suggested the market has completely priced in a scenario that the Tokyo Games planned this summer will not happen.

Analysts have estimated that a cancellation of the Games would reduce corporate Japan's earnings by 24%.

The Nikkei has now fallen 28% from a 15-month peak hit in January.

"The market has completely priced in cancellation of the Olympics but we still don't see where the bottom is," Watanabe said.

The Nikkei is now traded at about 80% of its book value, which is close to a low touched during the 2008-09 financial crisis, raising some hopes that the market may be near a bottom, analysts said.

Still, huge uncertainties over the corporate outlook are likely to keep many investors cautious after a market meltdown since last month.

The broader Topix fell 4.98% to 1,261.70. Turnover reached 4.89 trillion yen, the highest level in more than two years.

Real estate companies were hit severely, falling 10.0% to nine-year lows as the COVID-19 outbreak is expected to encourage remote working, possibly reducing demand for offices in the future.

Real Estate Investment Trusts, which had been bought heavily as an alternative to negative-yielding bonds, suffered brutal declines.

The TSE REIT index dived 10.5%, the biggest one-day drop since its 12.0% fall in October 2008. (Reporting by Hideyuki Sano; Editing by Muralikumar Anantharaman)

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