Japan's Topix Index Declines on Bankruptcy Concerns; Acom Jumps

By Masaki Kondo

Aug. 28 (Bloomberg) -- Japan's Topix index fell for a third day as a drop by developers on bankruptcy concerns overshadowed speculation banks will boost their stakes in consumer lenders.

Mitsui Fudosan Co. fell to a two-month low after Daiwa House Industry Co., Japan's second-biggest homebuilder by value, predicted more bankruptcies will follow the failure of seven listed property companies since July. Kawasaki Kisen Kaisha Ltd. led a gauge of shipping lines to a two-week low as cargo rates for commodities fell for a sixth day. Acom Co. surged 8.8 percent, the most in almost 10 months, on a newspaper report Japan's biggest bank will lift its stake in the consumer lender.

The Topix index lost 4.16, or 0.3 percent, to close at 1,219.53 in Tokyo, giving it a three-day, 1.6 percent decline. The Nikkei 225 Stock Average edged up 15.29, or 0.1 percent, to 12,768.25. Three stocks fell for every two that rose on the Topix.

``Amid a series of bankruptcies from real estate companies, investors can't rid themselves of financing concerns about the sector,'' said Naoki Fujiwara, who oversees about $720 million as chief fund manager at Tokyo-based Shinkin Asset Management Co. ``Companies that bought lots of property last year are in an especially tough situation as they will probably have to write down the value of their land assets.''

Failures of Japanese real estate companies will grow this year as banks cut back on lending, Daiwa House Chairman Takeo Higuchi said in an interview with Bloomberg Television. On Aug. 26, Sohken Homes Co. became the latest developer to file for debt protection, and bankruptcies in the industry doubled to 60 in July from a year earlier, according to Tokyo Shoko Research Ltd.

`Grave Atmosphere'

Mitsui Fudosan, the nation's largest real-estate company, dropped 3.1 percent to 2,225 yen, while Sumitomo Realty & Development Co., the third-biggest developer, slumped 2.5 percent to 2,125 yen. Condominium builder Hoosiers Corp. fell by its trading limit for a second day, losing 12 percent to a record low 7,030 yen. Real estate companies were the biggest decliner among 33 industry groups on the Topix.

``A grave atmosphere lingers among investors as bankruptcies among smaller real estate companies are continuing,'' Mitsushige Akino, who oversees the equivalent of $468 million at Ichiyoshi Investment Management Co. in Tokyo, said in an interview with Bloomberg Television.

Kawasaki Kisen, Japan's third-largest shipping line, fell 14 yen to 752, while bigger competitor Mitsui O.S.K. Lines Ltd. lost 1.6 percent to 1,261 yen. Inui Steamship Co. retreated 2.5 percent to 1,382 yen.

The Baltic Dry Index, a measure of shipping costs for commodities, fell for a sixth-straight trading day on weaker demand for so-called panamax ships to haul grains.

`Difficult to Survive'

Acom, Japan's largest consumer lender by value, leapt 8.8 percent to 3,090 yen, the sharpest jump since Nov. 6. Mitsubishi UFJ Financial Group Inc., the nation's biggest publicly traded bank, will spend 140 billion yen ($1.28 billion) to boost its stake in Acom to 40 percent from 15 percent to expand its retail business, the Mainichi newspaper said today. Both parties said in statements that nothing has been decided on such a deal.

Mitsubishi UFJ slipped 0.9 percent to 810 yen. Promise Co., a lender that's a fifth owned by Sumitomo Mitsui Financial Group Inc., climbed 7.5 percent to 2,505 yen. Aiful Corp., whose major shareholders don't include Japan's three-biggest banks, tumbled 8 percent to 833 yen, or less than half its value at the beginning of this year.

``Whereas Acom and Promise can get support from the big banks, Aiful can't expect the same,'' said Hiroaki Osakabe, a Tokyo-based fund manager at Chiba-Gin Asset Management Co, which oversees the equivalent of $1 billion. ``Repayments of interest to customers and tighter credit markets make it difficult for consumer lenders to survive alone.''

Acom and Promise were the biggest winners on the MSCI World Index, while Aiful posted the fifth-steepest drop.

Canon, Ricoh

Canon Inc., the nation's biggest office-equipment maker, sank 5.2 percent to 4,790 yen, the steepest drop since March 3, after rival Ricoh Co. agreed to buy U.S. distributor Ikon Office Solutions Inc. for $1.62 billion in cash. Ricoh added 2.9 percent to 1,777 yen.

``We take a positive view of the dealer acquisition as a basic strategy for expanding the copier business,'' Yoshitsugu Yamamoto, an analyst for UBS AG, wrote in a report on Ricoh dated today. ``Canon is now at risk of losing half of its copier sales in North America.''

Nikkei futures expiring in September dipped 0.1 percent to 12,770 in Osaka and declined 0.2 percent to 12,775 in Singapore.

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