Japan Stocks Fall

Japan's stocks dropped after hedge fund company Paulson & Co. said financial companies will write down more assets, rekindling concern credit-related losses will erode profit.

Nomura Holdings Inc., Japan's largest securities firm, sent brokerages to the biggest decline on the Topix index as a group. Honda Motor Co. headed for the sharpest drop in two weeks after FedEx Corp.'s earnings forecast sparked speculation Japan's biggest export market will shrink. Sanyo Electric Co. jumped on a report it will increase production of rechargeable batteries.

The Nikkei 225 Stock Average sank 224.30, or 1.6 percent, to 14,228.52 as of 9:37 a.m. The broader Topix index fell 21.84, or 1.6 percent, to 1,387.80, en route to the biggest decline in a week. About four stocks dropped for each that rose on the Topix.

John Paulson, founder of the hedge fund company Paulson & Co., said yesterday banks are only a third of the way through credit- related writedowns. Global financial companies so far have posted $396 billion in losses and charges stemming from the collapse of the U.S. mortgage market, according to Bloomberg data. Paulson earned the most of any hedge fund manager last year on bets that subprime debt would fall.

His comments coincided with Fifth Third Bancorp's announcement that the Cincinnati, Ohio-based bank cut its dividend by two-thirds and most of its second-quarter profit will evaporate, sending shares of U.S. regional banks to their biggest drop ever.

Nomura sank 3.1 percent to 1,716 yen, set for the biggest decline since June 9, while Daiwa Securities Group Inc. lost 3.6 percent to 1,060 yen. Sumitomo Mitsui Financial Group Inc., the nation's third-biggest publicly traded bank, slipped 3.2 percent to 910,000 yen. Brokerages and banks combined accounted for more than a fifth of the Topix's decline.

Honda dived 3.4 percent to 3,700 yen, and Mazda Motor Corp., which exports 80 percent of domestic production, sagged 3.7 percent to 579 yen. Matsushita Electric Industrial Co., the world's largest maker of consumer electronics, slid 2 percent to 2,425 yen, the first drop in five days.

FedEx, which controls about a third of the U.S. package market, yesterday forecast first-quarter profit that's as much as 40 percent lower than analysts had estimated. The environment in the coming year will be ``very difficult,'' the Memphis, Tennessee- based company said.

Sanyo, the world's largest maker of rechargeable batteries, leapt 5.2 percent to 285 yen, the biggest gainer on the Nikkei. The Osaka-based company will double annual production of nickel-metal hydride this year, the Nikkei newspaper said today without saying where it got the information. The company expects to boost sales in Japan and Europe, the newspaper said.

Japan Stocks Fall

TradingEconomics.com, Bloomberg
6/18/2008 7:20:29 PM