Japan Stocks Slide on Developer Bankruptcy; Inpex Slumps on Oil

By Masaki Kondo

Dec. 1 (Bloomberg) -- Japan stocks fell on concern business failures and bad loan costs will mount after builder Morimoto Co. became the nation’s second-biggest bankruptcy this year.

Mitsubishi Estate Co., Japan’s second-biggest developer, dropped 5.9 percent. Japan General Estate Co. plunged 16 percent after Mainichi Daily News said the company withdrew job offers to university graduates. Inpex Corp., Japan’s largest oil and gas explorer, lost 4.7 percent after crude prices fell.

The Nikkei 225 Stock Average slumped 190.02, or 2.2 percent, to 8,322.25 as of 10:01 a.m. in Tokyo, retreating from the gauge’s biggest weekly gain in a month. The broader Topix index declined 12.11, or 1.5 percent, to 822.71, with more than three shares dropping for each that rose.

“The deterioration of the economy has become increasingly clear,” Tomochika Kitaoka, a Tokyo-based strategist at Mizuho Securities Co., said in an interview with Bloomberg Television.

Increasing costs to dispose of nonperforming assets and shrinking demand in the U.S. caused Japan’s biggest listed companies to collectively report a 32 percent drop in first-half earnings, according to data compiled by Bloomberg News. Companies ranging from Toyota Motor Corp. to TV maker Sharp Corp. plan to cut jobs to reduce costs.

Morimoto filed for protection from creditors on Nov. 28 with 162 billion yen ($1.7 billion) of debt, nine months after going public. The bankruptcy was the second-biggest in Japan this year after that of developer Urban Corp. and set a new annual record for failures of listed companies in the post-World War II period, according to bankruptcy research company Teikoku Databank Ltd.

Twenty-three of those 30 bankruptcy cases were in the real estate and construction sectors.

‘Severe’ Situation

Mitsubishi Estate, which had gained 32 percent in the previous five sessions, dived 5.9 percent to 1,336 yen, leading a decline in the Nikkei. Japan General Estate plummeted 16 percent to 116 yen, set for the lowest level on record. The Mainichi said on Nov. 29 the Tokyo-based company retracted offers to 53 university students last month because of a “very severe” financial situation.

A gauge of real-estate companies posted the sharpest drop among 33 industry groups on the Topix, followed by mining companies.

Inpex lost 4.7 percent to 583,000 yen, while closest domestic rival Japan Petroleum Exploration Co. slid 6.3 percent to 3,590 yen. Kanto Natural Gas Development Co. fell 4.9 percent to 647 yen.

Crude oil for January delivery fell as much 2.4 percent to $53.10 a barrel in New York after the Organization of Petroleum Exporting Countries deferred a decision to cut output for another two weeks. A $1 price change in a barrel of oil alters Inpex’s annual net income by 2.2 billion yen, the company said in May.

Nikkei futures expiring in December retreated 2.2 percent to 8,330 in Osaka and slumped 1.9 percent to 8,330 in Singapore.

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