Takefuji Bankruptcy Drags Japanese Lenders Lower


Asian markets closed lower Tuesday. In Japan the Nikkei 225 Index fell 1.1% to 9,496 and in Hong Kong the Hang Seng Index slipped 1% to 22,110. China's Shanghai Composite Index dipped 0.6% to end the day at 2,611.

In Japan reports of an impending bankruptcy claim by of one of the country's biggest lenders sent shares lower. According to the Japan Times, Takefuji Corp.'s bankruptcy filing comes on the heels of a wave of borrowers reclaiming interest charges. In a 2006 decision Japan's Supreme Court deemed the interest charges that banks had been levying as "excessive," paving the way for millions to request refunds.

Takefuji is in a tough spot, since a plea of bankruptcy allows the bank to reduce the refunds, although cutting the payouts could ruin the institution's image among clients. In addition, Takefuji is suffering from debts of more than 430 billion yen ($5 billion) -- and that's without including the interest reimbursements.

Today Takefuji plunged 32.2%, falling from 171 yen ($2.03) to 116 yen ($1.38). Other lenders also declined, adding to yesterday's losses in the sector. Credit Saison fell 4.4%, Aiful slumped 3.3%, Acom tumbled 1.3% and Promise slid 0.9%.

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Making the situation worse, about 1,400 companies went ex-dividend today, according to Bloomberg. That means investors won't be receiving dividends for the period from April to September, dragging down the value of these shares.

Electronics companies closed lower with TDK Corp. declining 3.4%, Kyocera losing 2.2% and Taiyo Yuden sliding 2%. Sony fell 1.1%.

Japanese metals companies advanced with Nippon Light Metal surging 2% and Nippon Steel gaining 1.1%. Japanese industrial robot maker, Fanuc, also rose, adding 1.5%.

In Hong Kong growing fears that China is on the brink of introducing new measures to curb property speculation hurt shares in developers banks -- Hong Kong's predominant businesses. China-focused developers took a hit with China Resources Land slumping 3%, Guangzhou R&F sinking 2.9% and Shimao Property falling 2.1%. Among Hong Kong's blue-chip real estate firms, Henderson Land tumbled 2%, Cheung Kong lost 1.4% and Sun Hung Kai dipped 1.2%. Wharf Holdings and Swire both lost more than 2%.

Among Hong Kong banks that finance the property deals, HSBC sank 1.5%, Bank of Communications dropped 1.8% and Bank of China slid 0.7%. Meanwhile China Unicom, a telecom company with operations in China, plunged 4.3% and Television Broadcasts, a TV company known as TVB, descended 5.8% on rumors of a possible takeover by Lee Ka-kit, the son of Henderson Land's founder, writes Bloomberg.

In Shanghai, newcomer Ningbo Port had a disappointing debut, falling 3.5% after raising $1.1 billion in its IPO. Analysts blamed the poor performance on speculation that China's export growth could cool. Chinese shipping companies also lost value with China Shipping Container Lines diving 3.2%, China Shipping Development losing 1.2% and China COSCO Holdings dipping 0.5%.

Among Chinese developers China Vanke slumped 2.8%, Gemdale sank 0.8% and Poly Real Estate slid 0.6%. New regulations designed to combat land hoarding have been instated this week, which include rules about allotting a portion of all new development to affordable housing. A policy that won't bring in the millions paid for the sprawling luxury villas now popular with China's nouveau riche.