By Masaki Kondo and Toshiro Hasegawa
Feb. 24 (Bloomberg) -- Japanese stocks fell for a third day as Nomura Holdings Inc.’s equity sale to rebuild capital raised concern shareholder value will be reduced.
Nomura, the nation’s largest brokerage, lost 9.3 percent on its plan to replenish funds after four quarterly losses. Orix Corp., Japan’s No. 1 non-bank financial company, plunged by at least 10 percent for a second day after the bankruptcy of lender SFCG Co. Nintendo Co., the world’s top maker of handheld game players, added 6.4 percent in Osaka after KBC Securities Japan raised its rating and the yen weakened.
“Pessimism about company earnings hasn’t yet run its course,” said Naoyuki Torii, general manager of equities at Fukoku Mutual Life Insurance Co., which manages about $59 billion. “As massive losses eat into companies’ capital, investors are expecting more businesses will sell new stock and dilute shareholders’ equity.”
The Nikkei slid 107.60, or 1.5 percent, to close at 7,268.56 in Tokyo, recovering from a 3 percent drop that sent the gauge to the lowest since October 1982. The broader Topix index fell 5 points, or 0.7 percent, to 730.28, a level not seen since December 1983. The market value of stocks on the Tokyo bourse’s main section tumbled to the lowest level since May 2003.
Nomura will sell shares valued at as much as 291.2 billion yen ($3.1 billion) to boost capital that was eroded by four- straight quarterly losses, according to company filings yesterday. Nikko Citigroup Ltd. cut its share price estimate for Nomura by more than a third to 530 yen.
Nomura plunged 9.3 percent to 420 yen, while closest domestic rival Daiwa Securities Group Inc. lost 5.8 percent to 358 yen. Shinko Securities Co. retreated 4.7 percent to 181 yen. A gauge of brokerages was the biggest loser among 33 industry groups on the Topix, followed by consumer lenders.
Better Than Vietnam
The Nikkei has lost 18 percent in 2009, with consumer lenders and brokerages posting drops of more than 35 percent. Among the measure’s 225 constituents, 74 traded at 52-week lows today. With the Nikkei lagging behind all stock benchmarks in Asia except Vietnam’s, Japanese Finance Minister Kaoru Yosano today said the government should consider establishing a state- run investment fund to shore up the market.
“Even if the government manages to curb a decline in stocks, it wouldn’t help improve company earnings,” said Fukoku’s Torii. “What’s needed now is to stimulate the economy through public spending.”
Orix plummeted 10 percent to 1,854 yen, adding to yesterday’s 13 percent tumble. Takefuji Corp., Japan’s third- biggest consumer finance company by value, fell 7.9 percent to 362 yen, extending its nine-day slump to 50 percent. SFCG, a provider of loans for small businesses, yesterday said it filed for bankruptcy protection, becoming the 10th publicly traded company to go bust in Japan this year.
Rising Bankruptcies
“The collapse of SFCG may spark a new round of bankruptcies, especially among small businesses,” said Hiroshi Morikawa, a senior strategist at Tokyo-based MU Investments Co., which manages about $14 billion. “That will increase loan defaults and depress the balance sheets of small lenders.”
Nintendo, maker of the Wii video-game player, climbed 6.4 percent to 26,750 yen on the Osaka Securities Exchange, breaking a five-day losing stretch. KBC boosted its rating on the stock to “hold” from “sell,” citing “robust” overseas demand.
The Topix narrowed its loss in the afternoon session as the local currency weakened, boosting the value of repatriated overseas sales for Japanese manufacturers. The yen depreciated to as weak as 95.35 today, a level not seen since Dec. 1, from 93.02 at the close of stock trading earlier in Tokyo.
Nikkei futures expiring in March retreated 2.3 percent to 7,210 in Osaka and slumped 2.2 percent to 7,210 in Singapore.
To contact the reporter for this story: Masaki Kondo in Tokyo at mkondo3@bloomberg.net; Toshiro Hasegawa in Tokyo at thasegawa6@bloomberg.net.
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