By Masaki Kondo and Tomoko Yamazaki
Jan. 13 (Bloomberg) -- Japanese stocks fell, capping the longest losing streak in almost two months, as a stronger yen and media reports Sony Corp. and Toshiba Corp. will post losses stoked concern other companies will have disappointing earnings.
Sony lost 8.9 percent on a newspaper report it will likely post its first operating loss in 14 years. Toshiba fell 8.6 percent after broadcaster NHK said the company will incur its first such loss in seven years. Toyota Motor Corp., which counts North America as its biggest market by unit sales, dropped 6.4 percent after the yen appreciated to the strongest level in almost a month yesterday. Mitsubishi Estate Co. sank 9.2 percent after more real-estate companies filed for bankruptcy on Jan. 9.
“Given that Sony and Toyota are coming out with gloomy outlooks, we expect more major companies to do the same,” said Mitsushige Akino, chief investment officer who oversees about $430 million at Tokyo-based Ichiyoshi Investment Management Co. “We have yet to see significant dividend cuts, but once companies do that, it will weigh heavily on markets.”
The Nikkei 225 Stock Average declined 422.89, or 4.8 percent, to close at 8,413.91 in Tokyo. The broader Topix index fell 40.90, or 4.8 percent, to 814.12. The gauges slumped for a third day, the longest losing streak since Nov. 20. Japan’s market was closed for a national holiday yesterday when the MSCI AC Asia Pacific excluding Japan Index fell 3.2 percent.
Rising bankruptcies and the dimmer outlook for company earnings damped investor confidence in equities, triggering a flight to safer government debt. Dividend yields on Topix members climbed to 2.62 percent as of Jan. 9, according to data compiled by Bloomberg, twice the returns of 10-year government bonds.
Operating Losses
Sony will likely post an operating loss of about 100 billion yen ($1.1 billion) for the year to March 31, the Nikkei newspaper reported today. The median of analyst estimates compiled by Bloomberg showed 35 billion yen in profit. Meanwhile, Toshiba’s deteriorating chip business will cause the company to post an operating loss for this fiscal year, public broadcaster NHK said today.
Sony, the world’s second-biggest maker of consumer electronics, fell 8.9 percent to 2,000 yen, the steepest decline since Nov. 6. Toshiba, Japan’s largest chipmaker, sank 8.6 percent to 385 yen, the largest drop since Oct. 24. Electronics makers contributed the most to the Topix’s slump.
Toyota, which last month forecast its first operating loss in 71 years, lost 6.4 percent to 2,875 yen. It was the most actively traded stock in Tokyo. Closest rival, Honda Motor Co., which gets more than half of its profit from North America, fell 6.8 percent to 1,938 yen. Tokai Rika Co., an auto-parts maker 31 percent owned by Toyota, sank 9.9 percent to 787 yen after reversing its full-year profit outlook to a net loss today in part because of weaker sales.
Property Stocks
The yen appreciated against the dollar to as much as 88.88 yesterday, the strongest level since Dec. 19, from 91.15 at the close of stock trading in Tokyo on Jan. 9. Sony, which forecasts the U.S. currency will trade at an average of 100 yen in the second half, said in October that every 1 yen change against the dollar alters its annual operating profit by 4 billion yen. The local currency weakened against the dollar for the first time in five days today, depreciating as much as 0.4 percent to 89.54.
Mitsubishi Estate, Japan’s second-largest developer, sank 9.2 percent to 1,291 yen, while financial service provider Orix Corp., which counts real estate as its biggest source of profit, plunged 13 percent to 4,580 yen. Tokyo Tatemono Co. plummeted 16 percent to 323 yen after Daiwa Institute of Research Ltd. cut its rating on the stock to “underperform” from “outperform.”
‘Inpex Falls’
Real-estate advisory company Creed Corp. and condominium builder Toshin Housing Co. separately filed for bankruptcy last week. Creed said the worsening of the real-estate market outpaced its efforts to reduce debt through asset sales and cutting jobs.
“This bankruptcy will push the market back into ‘flight to quality’ mode,” Yoshihiro Hashimoto, an analyst at Merrill Lynch & Co., wrote in a report titled “Creed shock.”
Tokyo Shoko Research Ltd., a Tokyo-based provider of Japanese company information, today said bankruptcies among listed companies rose to the highest level in 2008 since World War II. Three-quarters of those failures were real estate- related, according to counts by Bloomberg.
Inpex Corp., Japan’s largest oil explorer, lost 7.9 percent to 644,000 yen, and closest rival Japan Petroleum Exploration Co. dropped 4.8 percent to 4,130 yen. Crude oil for February delivery fell as much as 2.6 percent to $36.60 a barrel today, extending its six-day drop to 25 percent.
Nikkei futures expiring in March retreated 5.4 percent to 8,370 in Osaka and slumped 3.9 percent to 8,375 in Singapore.
To contact the reporter for this story: Masaki Kondo in Tokyo at mkondo3@bloomberg.net; Tomoko Yamazaki in Tokyo at tyamazaki@bloomberg.net.
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