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Japan Stocks Fall Most in Two Months on Concern Banks to Post More Losses Japan's stocks fell, set for the biggest drop in two months, after Mitsubishi UFJ Financial Group Inc. said profit growth will stall, fueling concern the slowing economy will diminish lending demand.
Japan Stocks Slump Most in Two Months, Led by Banks, Insurance
By Masaki Kondo
May 21 (Bloomberg) -- Japan's stocks fell, set for the biggest drop in two months, after Mitsubishi UFJ Financial Group Inc. said profit growth will stall, fueling concern the slowing economy will diminish lending demand.
Mitsubishi UFJ, the nation's biggest publicly traded bank, sank to a one-month low, while Mizuho Financial Group Inc., the Japanese bank with the biggest losses related to U.S. mortgages, fell the most in two weeks. Orix Corp., Japan's largest non-bank financial company, tumbled the most in two weeks.
``I can't see signs of a recovery in banking,'' said Yoji Takeda, who helps manage the equivalent of $1.1 billion in Asian funds at RBC Investment (Asia) Ltd. in Hong Kong. ``Banks will probably have to build up provisions for loan defaults as Japan's economy will likely remain bearish for at least this year.''
The Nikkei 225 Stock Average dropped 300.85, or 2.1 percent, to 13,859.24 as of 1:51 p.m. in Tokyo. The broader Topix index fell 36.95, or 2.6 percent to 1,362.89, set for the sharpest drop since March 17.
Mitsubishi UFJ yesterday predicted profit that fell short of analysts' estimates as it expects lending to stagnate. The forecast coincided with Bank of Japan Governor Masaaki Shirakawa saying Japan's economy ``is clearly slowing'' and inflation risk is rising globally as oil prices soar.
`Unjustified' Price
The shares sank 5.1 percent to 1,001 yen, headed for the lowest since April 24. Mizuho, the nation's second-biggest bank by sales, fell 4.8 percent to 515,000 yen and was most the actively traded stock by value on the first section of the exchange. Orix dived 5.5 percent to 17,610 yen.
T&D Holdings Inc., Japan's second-largest publicly traded insurer, tumbled 6.9 percent to 6,470 yen, while Sompo Japan Insurance Inc. lost 5.9 percent to 1,077 yen. Larger competitor Millea Holdings Inc. slumped 4 percent to 4,130 yen.
HSBC Holdings Plc yesterday downgraded T&D after the insurer reported lower earnings, due in part to valuation losses of securities. The current share price is ``unjustified,'' HSBC analyst Seewon Oh wrote in a report.
Canon Inc., which gets a third of its sales from the Americas, fell 3.9 percent to 5,440 yen and Toyota Motor Corp., which gets about a half of its profit from North America, lost 3.9 percent to 5,210 yen. Sony Corp., the world's second-biggest maker of consumer electronics, dropped 2.7 percent to 5,020 yen.
The yen appreciated against the dollar to as much as 103.15 today, the strongest since May 9, from 104.04 at the close of stock trading yesterday. A stronger Japanese currency reduces the value of overseas sales.
Nikkei futures expiring in June retreated 2.4 percent to 13,860 in Osaka and slumped 2.3 percent to 13,865 in Singapore.
To contact the reporter for this story: Masaki Kondo in Tokyo at mkondo3@bloomberg.net.
Last Updated: May 21, 2008 01:20 EDT
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