Tokyo stocks down midday on another corp failure
(UPDATE: Adds volume, more shares, comments, S&P downgrade on Japan)
By Risa Maeda
TOKYO, Nov 28 (Reuters) - Tokyo stocks closed the Wednesday morning session lower, with several high-tech issues such as Sony Corp losing momentum after a retreat by their U.S. peers and low-priced stocks taking a beating after yet another company failure.
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News late on Tuesday that Niigata Engineering Co Ltd , a heavy machinery maker, had gone under reminded the market of the precarious state of many Japanese firms, particularly in the overcrowded and indebted construction sector, traders said.
``Such sudden deaths could come at any time between now and the end of March,'' said Tatsuyuki Kawasaki, director of equities trading at Kaneyama Securities.
He said that was especially true because Japan's banks were planning to reduce their problem loans more aggressively during the current business year to next March, meaning that funds could suddenly stop flowing to weaker borrowers, including some builders
The Nikkei 225 share average fell 169.19 points or 1.55 percent to 10,779.70 by the midday break. The Nikkei resumed its downtrend after hitting a three-month intraday high of 11,186.75 the previous day.
The broader, capital-weighted TOPIX index (^TOPX - news) was down 15.61 points or 1.45 percent at 1,063.98 at midday.
The blue-chip Dow Jones industrial average (^DJI - news) lost 1.10 percent on Tuesday after weak consumer confidence date fuelled fears the recent Wall Street rally had gone too far, too fast.
The retreat helped end a two-day, 5.6 percent rally in consumer electronics giant Sony, which lost 1.33 percent to 5,930 yen. Camera and copier maker Canon Inc dropped 3.5 percent to 4,130 yen after hitting a three-month high of 4,340 yen the previous day.
Trading was moderate, with 341.58 million shares changing hands on the first section of the Tokyo Stock Exchange, down from 358.18 million on Tuesday morning.
Decliners outpaced advancers 1,072 to 242.
LOW-PRICED ISSUES HIT
Shares of Niigata Engineering were ask-only at 33 yen, down by its daily limit of 30 yen and sharply below Tuesday's close of 63 yen before the firm's announcement that it had filed for court protection from creditors with 227 billion yen ($1.83 billion) in liabilities.
Niigata Engineering is the 12th publicly traded Japanese company to go under this year, following last Thursday's failure of non-life insurer Taisei Fire & Marine Insurance Co Ltd .
``That should stop investors from returning to low-priced issues from overheated high-techs -- the trend we saw yesterday,'' said Tokio Furuta, a general manager in equities trading at Tokai Tokyo Securities.
Ailing builders whose share prices had broken 50 yen took a beating in particular.
Haseko Corp tumbled 12.12 percent to 29 yen and fellow builder Sato Kogyo Co Ltd lost 8.57 percent to 32.
``Niigata Engineering is just one of several failures likely to follow as a result of banks' resolution of their bad-debt problems,'' said Ryuichi Endo, managing director at Japan Investment Trust Management, which oversees 754.28 billion yen of investment trusts.
``But a rise in credit risk means it's not so easy for banks to solve the problem,'' he added.
Bank stocks extended their falls after losing steam on a recent bull run triggered by signs of increased efforts to cut costs and clean up bad loans.
Investors are now focusing on major lenders' enormous loss forecasts arising from bad-loan disposals and the possibility that lenders may have to further increase provisions against problem loans due to borrowers' higher credit risks.
Mizuho Holdings , the world's biggest banking group by assets, slumped 7.31 percent to 317,000 yen, adding to Tuesday's 4.47 percent fall.
S&P DOWNGRADES JAPAN
During the midday break, U.S. ratings agency Standard and Poor's lowered its long-term local and foreign currency sovereign credit ratings on Japan to double-A from double-A-plus.
Analysts said the move, which came as little surprise, would likely have little impact on bond yields or stock prices.
``It wasn't really a surprise,'' said Matthew Poggi, economist at Lehman Brothers.
``In the past, (ratings downgrades) really haven't had that much of an impact. Typically, Japan has been downgraded a number of times in the last couple of years and it hasn't generated a rise in yields, so I suspect that it won't have that much of a short-term impact.''
Analysts said that even if the stock market were hit by selling, chart support for the Nikkei stood at around 10,500, its 25-day moving average as of Tuesday's close.
Sumitomo Realty & Development Co Ltd shot up 6.97 percent to 752 yen after the Nihon Keizai Shimbun business daily, the compiler of the Nikkei-225 average, replaced Niigata Engineering Co Ltd as a component in the average.
($1 equals 123.85 Yen) |
