Japan Stocks Fall on Earnings Concern, Oil; Shin-Etsu Drops

By Masaki Kondo

April 8 (Bloomberg) -- Japanese stocks fell after Daiwa Securities Group Inc. reported writedowns on investments and Shin-Etsu Chemical Co. posted lower-than-forecast profit, rekindling concern the global recession will weigh on earnings.

Daiwa, Japan’s No. 2 brokerage, lost 4.7 percent after saying its losses on securities holdings caused an annual loss. Shin-Etsu, the world’s largest maker of silicon wafers, dropped 4.6 percent. Kobe Steel Ltd. dived 4.2 percent after announcing its first annual loss in seven years. Inpex Corp. sank 2.6 percent after crude prices dropped.

“Results were surely poor for the fiscal year ended last month, but the market has priced that in to some degree,” said Yumi Nishimura, assistant manager at Daiwa Securities SMBC Co. in Tokyo. “Investors are awaiting profit forecasts companies are soon to disclose.”

The Nikkei 225 Stock Average declined 179.07, or 2 percent, to 8,653.78 as of 9:48 a.m. in Tokyo. The broader Topix index fell 13.96, or 1.7 percent, to 818.64, with four stocks sinking for each that rose.

Through yesterday, the Nikkei had risen by a quarter from its 26-year low on March 10, narrowing this year’s loss to 0.3 percent. The dividend yield on the Nikkei’s members dropped to 2.45 percent as of April 6, the lowest level since Jan. 9, according to index compiler Nikkei Inc.

Daiwa, Japan’s No. 2 brokerage, dived 4.7 percent to 490 yen, while market leader Nomura Holdings Inc. slid 1.4 percent to 573 yen. Daiwa yesterday said it wrote down the value of its securities holdings by 17.4 billion yen ($173 million), which brought about a full-year loss for the 12 months to March 31.

South Korean Supplier

Shin-Etsu dropped 4.6 percent to 4,730 yen. The company’s full-year net income was 13 percent lower than its forecast owing to the global economic slump, Shin-Etsu said yesterday in a preliminary earnings report.

Kobe Steel, Japan’s fourth-largest steelmaker, dropped 4.2 percent to 137 yen. The company yesterday announced its first annual loss in seven years because of lower sales of metals and construction equipment. Its annual net loss was 32 billion yen, compared with 88.9 billion yen in profit a year earlier, the company said in a preliminary earnings report.

Nippon Steel Corp., the world’s No. 2 mill, fell 1.7 percent to 286 yen, and smaller rival JFE Holdings Inc. declined 2.9 percent to 2,330 yen.

South Korea’s Posco yesterday said it won a steel contract from Sony Corp. for liquid-crystal display televisions. The Pohang, South Korea-based steelmaker became the first non- Japanese supplier of the metal to Sony.

Inpex, Japan’s biggest oil explorer, retreated 2.6 percent to 709,000 yen, and closest competitor Japan Petroleum Exploration Co. slid 3.1 percent to 4,030 yen. Crude oil for May delivery fell for a fourth day today, losing as much as 2.1 percent to $48.14 a barrel.

Nikkei futures expiring in June retreated 2.3 percent to 8,660 in Osaka and slumped 2.3 percent to 8,665 in Singapore.

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