Japan Real Estate Shares Slump; Chip Component Shares Gain

By Patrick Rial and Satoshi Kawano

July 22 (Bloomberg) -- Japanese property developer shares slumped amid concern the economy won’t stage a quick recovery, offsetting gains by makers of semiconductor materials after Shin-Etsu Chemical Co. said it is seeking to boost prices.

Tokyo Tatemono Co. lost 2.8 percent after the property developer’s president told the Nikkei on July 20 he doesn’t expect a sharp economic rebound in Japan. Mitsui O.S.K. Lines Ltd., the world’s largest merchant fleet operator, fell 1.3 percent, following a 1.6 percent retreat by the Baltic Dry Index. Shin-Etsu, the world’s largest maker of silicon wafers, jumped 4.7 percent after the Nikkei newspaper said the company may boost wafer prices by 40 percent.

About four shares rose for every three that fell on the broad Topix index. The gauge was little changed at 901.50 as of 10:43 a.m. in Tokyo, after advancing as much as 0.3 percent. The Nikkei 225 Stock Average was little changed at 9,648.66.

“Real estate is among the industries hardest hit by the recession,” said Kiyoshi Ishigane, a senior strategist at Tokyo-based Mitsubishi UFJ Asset Management Co., which oversees about $52 billion. “We’ll see decent earnings for the moment, but I question whether companies can keep improving their bottom line.”

Tokyo Tatemono President Makoto Hatanaka said in an interview with the Nikkei published July 20 that Japan’s economy will not have a “V-shaped” recovery and office vacancy rates are likely to continue rising outside of Tokyo. The shares fell 2.8 percent to 456 yen.

NTT Urban Development Corp., which manages properties for Japan’s former telephone monopoly, dropped 3.9 percent to 89,400 yen. K.K. DaVinci Advisors, which runs Japan’s biggest private real estate fund, slumped 6.4 percent to 11,770 yen.

Land Prices

Nationwide land prices posted gains of 8.6 percent and 10 percent in 2006 and 2007, according to the National Tax Agency, as the property market began a recovery from a decade-long slump.

Shin-Etsu jumped 4.7 percent to 4,730 yen. The Nikkei newspaper reported earlier that the company is in talks with customers to raise the price of 300 millimeter wafers by as much as 40 percent. Shin-Etsu said it is in negotiations, but declined to say how much of an increase it is seeking.

Sumco Corp., the world’s second-largest maker of silicon wafers, advanced 4 percent to 1,569 yen.

Stock gains were curbed after the yen strengthened against the dollar, reducing the value of sales generated overseas. The yen rose to as high as 93.40 per dollar, from 93.98 at the close of stock trading in Tokyo yesterday.

To contact the reporter for this story: Patrick Rial in Tokyo at prial@bloomberg.net; Satoshi Kawano in Tokyo at Skawano1@bloomberg.net