Japanese corporate bankruptcies jumped 43.7 percent in January

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Tuesday February 15, 2:43 am Eastern Time Nikkei ends down as company failures spark concern By Kiyoshi Takenaka

TOKYO, Feb 15 (Reuters) - Tokyo stocks settled lower on Tuesday as a recent spate of corporate failures spooked investors and rekindled worries about credit risks in the Japanese economy, traders said.

``The news about companies going under really threw cold water on Tokyo's recent trend of focusing more on value stocks,'' said Toshihiko Matsuno, deputy manager of the investment advisory office at Yamatane Securities.

The benchmark Nikkei average of 225 leading shares closed down 188.63 points or 0.96 percent at 19,367.83.

Condominium sales company L Kakuei Corp said on Tuesday it had filed for court protection from creditors with total liabilities of 153.4 billion yen.

This followed the failure of chain store operator Nagasakiya Co Ltd , which on Sunday said it filed for court protection from creditors after struggling with weak sales and soured real estate deals.

The March Nikkei futures <0#JNI:> lost 290 points to close at 19,400.

The TOPIX index (^TOPX - news) of all shares listed on the first section of the Tokyo Stock Exchange (TSE) fell 27.27 points or 1.59 percent to 1,690.14.

Confirming worries over the financial health of Japanese companies, credit research firm Teikoku Databank said on Tuesday Japanese corporate bankruptcies jumped 43.7 percent in January year-on-year to 1,441 cases.

The spectre of increasing corporate failures dealt a serious blow to banking shares, stoking concerns about potential problem loans.

Bank stocks, already under strong selling pressure since Tokyo Governor Shintaro Ishihara earlier this month proposed a new tax on major banks, fell across the board.

Fuji Bank fell 73 yen or 8.25 percent to 812, the Industrial Bank of Japan was down 76 yen or 8.98 percent at 770 yen and Dai-Ichi Kangyo Bank (DKB) lost 59 yen or 6.98 percent to end at 786 yen. The three banks plan to merge later this year.

DKB said in a statement on Sunday it may not recover 107.6 billion yen in loans extended to Nagasakiya and a subsidiary.

Trading house Tomen Corp's announcement last week that it would seek 200 billion yen in debt forgiveness from creditors also cast a pall over market sentiment, traders said. Tomen fell six yen or 9.38 percent to 58.

Among high-tech shares, Canon Inc fell 230 yen or 4.95 percent to 4,420 after the maker of printers, copiers and computer peripherals announced on Monday a drop in earnings during the last business year.

Toshiba Corp rose 41 yen or 4.44 percent to 965, after it said on Monday it aims for 500 billion yen in Internet-related sales in 2003.

Tuesday's trading volume was brisk at 815.47 million shares on the TSE's first section, up from Monday's 778.75 million.

Overall, decliners overwhelmed gainers 923 to 315 with 118 issues unchanged.

Among other indices, the Nikkei 300 fell 7.50 points or 2.39 percent to 306.84, but the second section index rose 23.67 points or 0.88 percent to end at 2,723.49.

Also bucking the trend was the OTC (over-the-counter) index (^NOTC - news), which rose 48.75 points or two percent to 2,484.69, buttressed by a strong performance in several Internet and information-technology shares.

Yahoo Japan rose by its daily limit of seven million yen or 5.47 percent to 135 million yen, while Oracle Corp Japan also rose by its daily limit of 10,000 yen or 12.5 percent to 90,000.

Traders said Tokyo stocks are expected to remain weak in the coming sessions as companies' unwinding of cross-held shares is likely to peak this week and next ahead of corporate book-closings at the end of March.

With the Nikkei average below the 19,500 point mark, the next support level is pegged at the 25-day moving average around 19,250, said Masayoshi Okamoto, a trader at Jujiya Securities.

Among other individual stocks, pharmaceutical firm SSP Co Ltd fell 34 yen or 3.16 percent to 1,041, well below a proposed tender offer of 1,100 yen per share by German drug maker Boehringer Ingelheim Corp. The offer closes on Tuesday.

Boehringer Ingelheim last month launched the tender offer in a bid to raise its stake in SSP from 19.6 percent.

Softbank Corp ended the Tuesday session unchanged at 169,000 yen, after rising as high as 198,000 following media reports that a Japanese consortium led by Softbank will be named to take over Nippon Credit Bank, now under state control.

Dowa Fire & Marine Insurance Co Ltd lost 11 yen or 3.48 percent to 305 after it said earlier on Tuesday it had agreed to merge with Nissay General Insurance Co, a subsidiary of leading insurer Nippon Life Insurance Co.

------------------ NIKKEI 225 IN PERSPECTIVE------------------ Move on day -0.96 percent Year high 20046.14 Year low 18068.10 Change on yr +2.29 percent All time high 38915.87 29 DEC 1989 All time low 85.25 06 JUL 1950

-- Bill P (porterwn@one.net), February 15, 2000


I remember reading articles in, e.g., Forbes or Fortune, as far back as over two years ago about the high percentage of problem loans among major Japanese banks.

The problem has been that those banks were showing those loans at book value, not at a highly discounted value, on their books. From what I remember, U.S. Treasury officials have been pressuring the Japanese to pressure their banking system to address those problems.

Why? So that U.S. Wall Street houses, such as Salomon, would be buying into Japanese financial houses at much more realiztic values as the time came to penetrate the Japanese securities markets.

At least one of those articles spoke to the Yakusa, as a significant part of this problem. Turns out that banks and businesses will take a highly-inflated position in a Yakusa-run business, paying for 'protection' legally. But also forever more carrying that shell business at a grossly-inflated book value -- oops.

Sorry, I can't offer a link or reference -- the idetic memory genes never appeared to work properly.

BTW, the 'a Softbank-led consortium' phrase caught my attention; kindof like Microsoft taking over one of the largest U.S. money-center banks?

-- Redeye in Ohio (cannot@work.com), February 15, 2000.

Also consider that the "Governor" of Tokyo is considering adding a 3% tax to all major banks in Tokyo. If implemented, that could certainly add more "squeeze" play. (No, I don't have the link handy right now, but I did post it in an earlier banking thread...)

-- Deb M. (vmcclell@columbus.rr.com), February 15, 2000.

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