Builder Bankruptcy Drives Nikkei Lower

123jump.com Staff
27 Aug, 2008
New York City

Stocks in Japan fell as fourth home builder filed for bankruptcy protection in as many months. Tight lending standards and revised and tougher building code pushed several home builders into financial distress. Tokyo office rent fell in August from July, a first monthly decline in three decades. The news of the bankruptcy dragged stocks lower.

[R]5:00AM New York, 7:00PM Tokyo- Sohken Homes files for bankruptcy protection with 33.8 billion yen liabilities.[/R]

Japan stock indexes plummeted after Sohken Homes became the latest casualty in the Japanese property market when it filed for bankruptcy with a Tokyo District Court yesterday.

Market Sentiment

In Tokyo trading Nikkei 225 fell 0.2% or 25.75 to 12,752.96, and the broader Topix Index fell 0.5% or 5.66 to 1,223.69.

In the first section of the Tokyo Stock Exchange 6.2 billion shares worth 602 billion yen were traded and in the second section 113 million shares valued at 1.5 billion yen changed hands.

Of the Nikkei 225 stocks 89 rose, 122 declined, and 14 were unchanged. Nippon Paper Group led advancers in the index shares with a rise of 5.07% followed by Eisai Co. Ltd rising 3.99%.

Sohken Homes Files for Bankruptcy

MarketWatch.com, a unit of Dow Jones reported on its Web site today that shares of Sohken Homes Co. were suspended from trading today after the company filed for bankruptcy with the Tokyo District Court and declared total liabilities of 33.8 billion yen.

According to the homebuilder, the company will be delisted from the Tokyo Stock Exchange on September 27.

Yesterday Sebon Corp., which has 85.25% equity in Asahi Homes, also filed for bankruptcy protection with 62 billion yen in liabilities. In addition, last month condominium developer Zephyr Co. and Suruga Corp. filed for court-led rehabilitation with debts around 95 billion yen and 62 billion yen respectively.

Property developers are increasingly being affected by the tightened conditions for real estate loan applications and also by the enforcement of the new and tougher Building Standards Law by the government last year.

Tokyo Office Rents Falls Most in 35 Months

The Nikkei News reported on its Web site today that office rent in central Tokyo dropped below the previous month’s level in July for the first time in 35 months. Separately, the online edition also reported that large-lot realty deals fell to 64 from 109 the same, period a year earlier.

Gainers & Losers

Nippon Paper Group led advancers in the Nikkei 225 index shares with a rise of 5.07% followed by increases in Eisai Co. Ltd of 3.99%, in Nippon Soda Co. of 3.96%, in Mitsui Sumitomo Insurance Corp. of 3.94%, and OJI Paper Co Ltd. of 3.74%.

Other paper companies also increased as well. Mitsubishi Paper edged up 3.67% and Hokuetsu advanced 2.61%.

Energy stocks also increased as crude oil for October delivery rose 1% to $116.27 a barrel on forecasts showing that Hurricane Gustav may enter the Gulf of Mexico. Inpex rose 1.15% and Nippon Oil Corp soared 0.31%.

Kumagai Gumi Co led decliners in the Nikkei 225 index shares with a fall of 4.76% followed by losses in Nissan Motor of 4.68%, in JTEKT Corp. of 4.62%, in Isuzu Motors of 4.35%, and Bank of Yokohama of 4.25%.

Realty stocks fell after Sohken Homes filed for bankruptcy protection. Sumitomo Realty dropped 2.90% and Tokyu Land Corp. dipped 2.53%.

Other regional banks also slumped. Chiba Bank shed 3.41% and Fukuoka Financial lost 3.21%.

Softbank Mobile to Slash Fees for iPhone

Japan Today reported on its Web site today that Softbank Mobile Corp said yesterday that it will reduce the minimum monthly basic fee for Apple Inc’s iPhone from the current 2,990 yen to 2,324 yen in order to up the stakes with NTT DoCoMo Inc which recently launched new low-charge services.

The report notes that the new basic fee will be effective on Wednesday and is nearly 5,000 yen lower than the initial charge of 7,280 yen.

Asian Markets Review

The Nikkei 225 Index in Tokyo closed lower 25.75 or 0.20% to 12,752.96, , Hang Seng index in Hong Kong increased 408.06 or 1.94% closed to 21,464.72.ASX 200 index in Australia increased 3.70 or 0.07% to close 5,011.20. The KL Composite index in Malaysia decreased 2.85 or 0.27% closed to 1,067.65.

The Kospi Index in South Korea increased 3.67 or 0.25% to close at 1,493.92, SET index in Thailand closed higher 7.07 or 1.06% to 675.99 and JSE Index in Indonesia increased 23.52 or 1.12% to 2,131.06. The Sensex index in India decreased 185.43 or 1.28% closed to 14,296.79.