Japan Stocks Fall on U.S. Manufacturing; Inpex Drops on Oil

By Masaki Kondo

Dec. 16 (Bloomberg) -- Japan stocks slumped as a drop in U.S. manufacturing and Isuzu Motors Ltd.’s cutbacks in developing markets pointed to a deepening of the global economic recession.

Honda Motor Co., which gets more than half its sales from North America, slid 6.6 percent. Isuzu, Japan’s largest truckmaker, tumbled 5 percent after putting expansion plans in Thailand and Russia on hold. Sony Corp., the world’s second- biggest maker of consumer electronics, dived 5 percent after Credit Suisse Group more than halved its price estimate. Inpex Corp., Japan’s largest oil and gas explorer, sank 5.4 percent after crude fell for a second day.

The Nikkei 225 Stock Average declined 190.61, or 2.2 percent, to 8,474.05 as of 9:39 a.m. in Tokyo. The broader Topix index fell 21.03, or 2.5 percent, to 825.90, with almost five stocks slumping for each that advanced.

The current price level of Japanese equities “is based on the assumption the global economy will recover from the second half of next year,” Mamoru Shimode, chief equity strategist at Deutsche Bank AG, said in an interview with Bloomberg Television. “There is no evidence for that, and investors are reluctant to make a move until they see the evidence.”

Manufacturing in the U.S. fell 0.6 percent last month, the Federal Reserve said today, while the New York Fed’s regional economic index slipped to minus 25.8, the lowest level since the tally began in 2001, from 25.4 in November. Readings below zero signal manufacturing is shrinking.

Fundamental Changes

Honda, Japan’s second-biggest automaker, sank 6.6 percent to 1,947 yen, while closest rival Nissan Motor Co. slid 5.7 percent to 312 yen. Isuzu fell 5 percent to 113 yen after President Susumu Hosoi said in an interview with Bloomberg News the company scrapped expansion of pick-up truck production in Thailand and delayed a plan to manufacture trucks in Russia next year.

Sony sagged 5 percent to 1,843 yen. Credit Suisse cut its investment rating on the stock to “underperform” from “neutral” and slashed its 12-month price estimate on the stock by 59 percent to 1,000 yen, saying Sony needs fundamental changes in its business to catch up with Apple Inc. and Nintendo Co.

Inpex fell 5.4 percent to 616,000 yen, while rival Japan Petroleum Exploration Co. lost 3.2 percent to 3,680 yen. Crude oil for January delivery extended its drop to a second session yesterday, falling 3.8 percent to settle at $44.51 a barrel in New York. The contract rebounded as much as 1.2 percent today.

Nikkei futures expiring in March retreated 1.7 percent to 8,480 in Osaka and slumped 2 percent to 8,480 in Singapore.

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