Toyota Falls to 15-Month Low as Banks to Cut Stakes
from Bloomberg
By Yukiko Takai, Desmond Hutton and Bradley Meacham
Tokyo, Jan. 11 (Bloomberg) -- Toyota Motor Corp. shares tumbled to a 15-month low after bankers said they are helping the carmaker sell about 400 billion yen ($3.4 billion) of its stock owned by Japanese financial companies as early as next week.
Japan's largest automaker fell as much as 8.2 percent to 3,370 yen and recently traded at 3,400, a decline of 7.4 percent. It was the second-most active stock in Tokyo trading by value.
The sale, which the bankers said may be cut to 100 billion yen or increased to 800 billion yen depending on investor demand, is the second such transaction involving Toyota stock since September 1999. Banks are selling stock holdings to cover bad loans and because accounting changes may force them to book huge losses on their investments.
``People have been selling Toyota on concern of excessive supply in the market,'' said Takehiko Takachio, a senior portfolio manager at Kokusai Asset Management Co., which oversees 722 billion yen ($6.7 billion) in Japanese equities, including Toyota shares.
The prospect of Japanese banks reducing their holdings of many companies -- to meet legal requirements and prepare for accounting changes -- triggered declines in other Japanese shares that might be affected.
The Topix Index of all shares traded on the first section of the Tokyo Stock Exchange, fell 2.5 percent, led by Toyota and NTT CoCoMo Inc., which is planning to sell new shares to finance its purchase of a 16 percent stake in AT&T Wireless Group.
Merrill Lynch & Co., Nomura Securities Co. and UBS Warburg are arranging the sale of Toyota stock. Toyota's involvement is aimed at limiting any decline in its shares.
``We cannot comment,'' said Tetsuo Kitagawa, general manager of international communications at Toyota.
Toyota last September helped Mitsui Trust & Banking Co., Mitsui Mutual Life Insurance Co. and Chiyoda Fire & Marine Insurance Co. raise $1.5 billion by selling 45 million of their Toyota shares in a transaction that coincided with its move to have its securities quoted on the New York and London Stock exchanges.
Forced Sales
Banks and insurance companies including Sakura Bank Ltd., Sanwa Bank Ltd., Tokai Bank Ltd., Nippon Life Insurance Co. and Bank of Tokyo-Mitsubishi Bank Ltd. owned about a third of Toyota as of last March.
After World War II, the government encouraged banks to retain stakes in many of their corporate clients to help rebuild the economy. These investments cemented the role of banks as key members of business groups, known as keiretsu.
Banks are now under pressure to reduce the stakes as they merge and diversify their assets.
Under new accounting rules that take effect in April at the start of the new financial year, banks must account for such stock investments based on any change in their market value, rather than their book value. The Topix has fallen almost 30 percent in the current fiscal year.
Banks also need to sell shares to cover rising bad loans. Mizuho Holdings Inc., the combination of Dai-Ichi Kangyo Bank Ltd., Fuji Bank Ltd. and Industrial Bank of Japan Ltd., sold shares in Japanese firms totaling 640 billion yen in the six months through Sept. 2000.
Merging banks such as Sakura and Sumitomo Bank Ltd. have five years to cut their combined holdings in unrelated companies to below 5 percent, said Hiroshi Ohsawa, an official in the banking division at Japan's Financial Services Agency.
Japanese law allows bank holding companies to hold up to 15 percent of an unrelated company, he said. Sanwa and Tokai, plan to combine in April to form UFJ Holdings Inc., one such holding company.
``We cannot comment on individual companies,'' said Tokai spokesman Tetsuya Watanabe. Sakura Bank spokesman Takeo Furutachi and Bank of Tokyo-Mitsubishi spokeswoman Junko Nagata also declined to comment on the issue.
Time to Buy?
Toyota shares have lost 30 percent of their value in the past six months, exceeding the 23 percent decline of the Topix.
With a market capitalization of about 12.8 trillion yen ($110 billion), the automaker is still valued at more than General Motors Corp. and Ford Motor Co. combined.
Some investors sense a buying opportunity.
``I may increase my holding of Toyota if the share price falls to 3,000 yen,'' said Hideo Ueki a manager at UBS Asset Management who oversees $10 billion in Japanese equities.
Kokusai Asset's Takachio also said if the shares fall near 3,400 yen, he will increase his holding.
``The sale will be already discounted in the share price if it falls to around 3,400,'' he said.
Takachio also said he hopes that Toyota will use some of its cash to buy its own stock to improve the company's return on equity by reducing the number of shares outstanding.
Best Regards, J.T. |
