Japan Stocks Fall on Developer's Bankruptcy; Papermakers Rise

By Masaki Kondo

Aug. 27 (Bloomberg) -- Japan's stocks fell after developer Sohken Homes Co. filed for bankruptcy, sparking concern consumers are holding back on purchases as the economy slows.

Sumitomo Realty & Development Co., Japan's third-biggest developer, slumped 2.9 percent while Sohken tumbled by its daily limit. Nissan Motor Co., Japan's third-largest automaker, dropped 4.7 percent after Morgan Stanley cut its price target. Nippon Paper Group Inc. led a gauge of papermakers to the biggest gain in three weeks as investors flocked to companies whose earnings are relatively resilient against an economic slowdown.

``If consumers were confident their salaries would remain secure, they'd buy condos and homes even with 30-year loans,'' said Yoshihiro Ito, senior strategist at Okasan Asset Management Co. in Tokyo, which oversees about $9.3 billion. ``With rising prices and stagnant income growth, that isn't the case now.''

The Nikkei 225 Stock Average dropped 25.75, or 0.2 percent, to close at 12,752.96 in Tokyo. The broader Topix index retreated 5.66, or 0.5 percent, to 1,223.69. More than two stocks declined for each that rose on the Topix.

Failures at rival developers exacerbated a worsening property market and difficulty in refinancing debt, Sohken said yesterday when it filed for court protection from 33.9 billion yen ($310 million) in liabilities.

The collapse followed those of the parent of Asahi Homes Co. on Aug. 25 and condominium builder Urban Corp., which became Japan's biggest bankruptcy case in six years on Aug. 13. Bankruptcies among Japanese property companies more than doubled to 60 in July from a year earlier, according to Tokyo Shoko Research Ltd.

Nikkei futures expiring in September dipped 0.2 percent to 12,760 in Osaka and slumped 0.3 percent to 12,750 in Singapore.

To contact the reporter for this story: Masaki Kondo in Tokyo at mkondo3@bloomberg.net.