Japanese stocks fell on concern a deepening economic slump will force banks to raise more capital and the stronger yen dented the earnings prospects of auto and electronics makers, Bloomberg reported.
Shinsei Bank Ltd. sank 5.1 percent as speculation global banks need to bolster capital sent U.S. financial shares to an almost 14-year low yesterday. Funai Electric Co., which counts North America as its biggest market by sales, lost 3.9 percent in Osaka trading after the yen strengthened. Mazda Motor Corp., Japan's fourth-largest automaker, slid 3.2 percent on a newspaper report it's seeking government aid to help pay salaries.
"The concern is that banks around the world are short of capital. As we increasingly come to that realization, stocks are just getting hammered," said Philip Schwartz, who directly manages $800 million of international equities at ING Investment Management in New York.
The Nikkei 225 Stock Average declined 110.25, or 1.4 percent, to 7,955.54 as of 9:05 a.m. in Tokyo, set for the lowest close since Dec. 5. The broader Topix index fell 16.89, or 2.1 percent, to 788.14.
The Nikkei lost a record 42 percent last year as global financial companies posted more than $1 trillion in writedowns and credit losses and the world's biggest economies slipped into recession. Japan's slump will be "very severe" and may last for three years, Hiroshi Yoshikawa, head of the government committee that charts the economic cycle, said in an interview this week. That would mark the country's longest downturn since the World War II.
Yesterday, U.S. financial shares plummeted on concern mounting losses will force companies to raise more capital. Bank of America Corp., which last week posted its first quarterly loss since 1991, dropped 29 percent after Friedman, Billings, Ramsey Group Inc. said the bank needs at least $80 billion to restore its capital. State Street Corp., the largest money manager for institutions, tumbled 59 percent after its unrealized losses almost doubled as of Dec. 31 from three months earlier.
The yen appreciated to as much as 89.69 today from 90.28 at the 3 p.m. close of stock trading in Tokyo. A stronger Japanese currency cuts the value of overseas sales for the nation's companies.
