Japan Stocks Plunge on Developer Bankruptcy; Carmakers Slump

By Masaki Kondo

March 30 (Bloomberg) -- Japanese stocks fell the most in more than two months on concern the recession will trigger more corporate failures and demand for vehicles will contract.

Mitsui Fudosan Co., Japan’s No. 1 real estate developer, plunged 9.2 percent after smaller rival Azel Corp. went bankrupt. Mizuho Financial Group Inc. lost 8.8 percent as Goldman Sachs Group Inc. recommended selling the stock, and JPMorgan Chase & Co. and Bank of America Corp. said performance deteriorated this month. Mazda Motor Corp. plunged 12 percent as Japanese auto production declined the most since 1967. Car-parts maker Denso Corp. sank 7.7 percent after the U.S. said bankruptcy may be the best alternative for American automakers.

The Nikkei 225 Stock Average declined 390.89, or 4.5 percent, to close at 8,236.08 in Tokyo, the sharpest drop since Jan. 15. The Topix index fell 34.99, or 4.2 percent, to 789.54.

“The fundamentals of the global economy still remain very weak, and I can’t yet draw any rosy outlook,” said Hisakazu Amano, head of fund management at Tokyo-based T&D Asset Management Co., which oversees about $39 billion. “A recovery in the real estate market isn’t in sight, with tightening money flow to the sector and contracting demand for property.”

The Nikkei gained 14 percent through March 27, set for the best monthly performance since July 1995, as the U.S. outlined a plan to buy illiquid assets from banks and the Bank of Japan stepped up efforts to boost lending. The gauge’s members traded at 100 times estimated net income for this fiscal year, up from 69.9 times at the beginning of this month.

Azel filed for bankruptcy with 44.2 billion yen ($452 million) in debt, the company said today, citing a slump in condominium sales, difficulty in getting loans, and failures among construction companies. Bankruptcies among Japan’s listed corporations reached 33 last year, a postwar record, according to Tokyo Shoko Research Ltd.

Domestic production at Japan’s 12 manufacturers fell to 481,396 vehicles from a year earlier, the Tokyo-based Japan Automobile Manufacturers Association said in a statement today. Exports dropped 64 percent to 212,107 vehicles as the carmakers reduced shipments to North America by 66 percent.

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