By Rocky Swift
TOKYO (Reuters) -Nidec shares plunged in Tokyo trading on Tuesday after the exchange put the precision motor maker on alert for possible delisting and Nikkei said the company would be expelled from its benchmark index following a deepening accounting scandal.
The company’s shares sank by their daily 500 yen limit, or 19%, to 2,070.50 yen soon after the market opened, hitting the lowest level since April.
Nidec on Tuesday apologised to shareholders after the Tokyo Stock Exchange issued a “special alert” on Monday giving the company one year to improve its internal management systems or face delisting from the bourse.
In addition, the Nikkei 225 Stock Average operator said the company would be replaced on its benchmark gauge by circuit board maker Ibiden from November 5.
The stock also faces deletion from the TSE’s Topix index based on the gauge’s rules, according to Brian Freitas, a trader with Periscope Analytics.
“Both deletions together will increase Nidec Corp’s real float by 26% and should take the stock a lot lower from here,” he wrote on the Smartkarma platform, referring to forced selling by index-linked funds if it is excluded.
The stock has shed a third of its value since September 3, when the Kyoto-based company said it was setting up an independent committee to investigate the possible involvement of management in improper accounting at a Chinese subsidiary.
In addition to withdrawing its forecast for the fiscal year ending March 2026, Nidec said it would not pay an interim dividend and cancelled an already approved share buyback programme on account of the investigation.
The issues with the Chinese unit were preceded by the company’s revelation in June of possible lapses at its Italian subsidiary, causing Nidec to delay the filing of its financial report for the previous fiscal year.
Although Nidec met a delayed deadline to submit the annual report last month, the company’s auditor, PwC Japan, withheld an opinion on its financial statements, citing insufficient audit evidence.
(Reporting by Rocky Swift in Tokyo; Editing by Jamie Freed)
