Japan Stocks Fall Most in Three Weeks; Resource Companies Drop

By Akiko Ikeda and Masaki Kondo

Oct. 27 (Bloomberg) -- Japanese stocks fell the most in three weeks as commodities companies tracked crude-oil prices lower, shipping lines slashed profit forecasts and consumer lenders declined on concern new regulations will cut earnings.

Mitsubishi Corp. and Mitsui & Co., Japan’s largest commodities traders, sank more than 4 percent after crude oil dropped the most in a month. Kawasaki Kisen Kaisha Ltd., Japan’s third-biggest shipping line by sales, slumped 6.4 percent after more than doubling its loss forecast. Acom Co., a consumer lender, plummeted 7.5 percent after an industry group said new rules will reduce people’s ability to borrow.

“There is so much uncertainty over consumer lenders,” said Hideo Arimura, a senior fund manager at Mizuho Asset Management Co., which oversees the equivalent of $35 billion in Tokyo. “There are few institutional investors who touch these shares and I can’t come up with any reason their shares will rise.”

The Nikkei 225 Stock Average lost 1.5 percent to 10,212.46 at the close in Tokyo. The broader Topix index decreased 1.7 percent to 895.48, with five times as many shares declining as advancing. Both gauges slumped the most since Oct. 2, and all but one of the Topix’s 33 industry groups retreated.

Mitsubishi, which gets 39 percent of its sales from commodities, declined 5.5 percent to 1,962 yen, and Mitsui tumbled 4.9 percent to 1,243 yen. Trading companies fell the most among the Topix’s 33 groups, followed by consumer lenders.

Crude oil for December delivery lost 2.3 percent to $78.68 a barrel in New York yesterday, the biggest drop since Sept. 28.

Commodities, Shipping Lines

Pacific Metals Co., a nickel producer, sank 6.1 percent to 712 yen after Goldman Sachs Group Inc. rated the stock “sell” in new coverage.

“Declines in commodity prices have a great impact on Japanese stocks, as they are highly correlated,” said Masanori Ikunaga, who helps manage about $4.1 billion at Sumitomo Mitsui Asset Management Co.

Acom tumbled 7.5 percent to 1,186 yen, extending a 4 percent decline yesterday to the lowest close since the consumer lender went public in 1993. Aiful Corp. sank 2.1 percent to 140 yen, and Promise Co. dropped 4.7 percent to 587 yen.

Half of all borrowers at consumer lenders may be rejected for additional loans because of regulations that take effect in June 2010, the Japan Financial Services Association said yesterday. The new rules will limit total borrowing from consumer lenders to one-third of income.

Container Business ‘Problem’

Kawasaki Kisen lost 6.4 percent to 353 yen. The shipper widened its forecast annual net loss to 79 billion yen ($858 million) from 31 billion yen. Nippon Yusen K.K., Japan’s largest shipping line by sales, fell 2.5 percent to 347 yen after the company cut fleet spending plans by half and widened its loss forecast fivefold.

Mitsui O.S.K. Lines Ltd. dropped 2.5 percent to 551 yen. The operator of the world’s largest merchant fleet slashed its profit forecast 93 percent to 2 billion yen.

“The container business is the big problem for shipping lines,” said Masayuki Kubota, who oversees the equivalent of $1.7 billion in assets in Tokyo at Daiwa SB Investments Ltd. “New ships are going to keep coming onto the market and supply will increase.”

Astellas Pharma Inc. plunged 6.7 percent to 3,340 after Toshihide Yoda, an analyst Barclays Plc, cut the drugmaker to “underweight” from “equal-weight,” saying a competitor’s product is hurting sales. Astellas, Kawasaki Kisen, Pacific Metals and Mitsubishi had the steepest declines in the Nikkei.

Chuo Mitsui Trust Holdings Inc., a trust bank, surged 7.9 percent to 367 yen before being halted, after the Nikkei newspaper said it will merge with Sumitomo Trust & Banking Co. Chuo Mitsui had the biggest gain in the Nikkei 225.

To contact the reporters for this story: Akiko Ikeda in Tokyo at iakiko@bloomberg.net; Masaki Kondo in Tokyo at mkondo3@bloomberg.net.