Japan Stocks Drop to 5-Month Low, Led by Glassmakers, Shippers

By Masaki Kondo

Sept. 4 (Bloomberg) -- Japan's stocks fell to a five-month low, led by glassmakers and shipping lines, after slumping orders for television screens prompted U.S.-based Corning Inc. to cut its forecast, and cargo rates for commodities plunged.

Nippon Electric Glass Co., the world's third-biggest maker of glass for flat-screen televisions, tumbled 14 percent to a three-year low. Mitsui O.S.K. Lines Ltd. plummeted 7.3 percent, leading shipping lines to the lowest in seven months. Yokohama Rubber Co., Japan's second-biggest tiremaker, jumped 3.8 percent after saying it will raise prices by as much as a 10th.

``With wage growth stagnant, people are holding back from replacing their TVs with new ones,'' said Hisakazu Amano, head of fund management at T&D Asset Management Co., which oversees the equivalent of $39 billion. ``Once sentiment turns sour, investors can't stop focusing on negative factors in the market.''

The Nikkei 225 Stock Average retreated 131.93, or 1 percent, to close at 12,557.66 in Tokyo. The broader Topix index dropped 18.90, or 1.6 percent, to 1,201.65, the lowest close since March 19. More than three stocks fell for each that rose on the Topix.

The Nikkei has tumbled 18 percent this year as the fastest inflation in a decade reduced consumer spending power and corporate bankruptcies spiked to a five-year high as banks reduced back on lending.

Corning, the biggest maker of glass for flat-panel displays, cut its third-quarter earnings and sales estimates as TV-set makers trimmed orders. Sony Corp., the maker of Bravia liquid- crystal display TVs, said last month the company's business is struggling in the U.S. and Western Europe, even as it maintained its annual TV sales target.

Baltic Dry

Nippon Electric Glass dived 14 percent to 1,225 yen, the lowest since August 2005, making the company the second-worst performer on the MSCI World Index. Asahi Glass Co., Asia's largest glassmaker, lost 3.4 percent to 1,068 yen.

A gauge tracking glassmakers posted the second-sharpest drop among Topix groups and sank to the lowest since May 2005. Shipping lines were the biggest loser as a group, dropping the most since Jan. 22.

Mitsui O.S.K., the nation's second-largest shipping line, plunged 7.3 percent to 1,116 yen, the worst slump since Feb. 6. Smaller rival Kawasaki Kisen Kaisha Ltd. retreated 5.9 percent to 652 yen, while Nippon Yusen K.K., Japan's biggest marine transport company, fell 5 percent to 787 yen.

The Baltic Dry Index, a measure of shipping costs for commodities, yesterday plunged 5 percent to the lowest in seven months on weaker Chinese demand for materials such as iron ore.

Alex Chang, an analyst for UBS, lowered his outlook on the global shipping industry to ``negative,'' saying carriers are facing slowing demand, excess supply and price competition.

Honda, Hino

Yokohama Rubber surged 3.8 percent to 606 yen, the highest since Feb. 4, after saying it will raise prices for rubber hoses and other products by as much as 10 percent. Bridgestone Corp., the world's largest tiremaker, gained 2.1 percent to 1,992 yen, the highest since Dec. 27, after Goldman Sachs Group Inc. and UBS AG raised it to ``buy.''

Honda Motor Co., Japan's second-largest carmaker, jumped 3.1 percent to 3,640 yen. The company yesterday reported a 7.3 percent decline in U.S. sales last month from a year earlier, while General Motors Corp. and Ford Motor Co. posted a 20 percent and 27 percent drop respectively.

In contrast, Hino Motors Ltd., the nation's biggest maker of heavy-duty trucks, sank 8.4 percent, the most since November 2001, to 488 yen. Hino's sales of sport-utility vehicles more than halved in the U.S. last month, according to Autodata Corp., a U.S.-based research company. Lehman Brothers Holdings Inc. cut its rating on the stock to ``equalweight/neutral'' from ``overweight/neutral.''

Nikkei futures expiring in September retreated 0.8 percent to 12,580 in Osaka and slumped 0.9 percent to 12,575 in Singapore.

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