TOKYO: Investors dumped stocks in Japanese property and builders yesterday after developer Urban Corp failed in the biggest collapse by a listed Japanese company in six years, which fanned fears others might follow.
Urban, which failed with debts of US$2.4bil, was the latest in a string of Japanese real estate firms to fold as banks rein in lending to small and medium-sized developers seen at risk as the world’s No. 2 economy flirts with recession.
“Urban failed even after reporting a profit last year, and lots of firms in this sector have borrowed heavily. How can investors tell which companies are in danger?” said Tsutomu Yamada, a market analyst at Kabu.com Securities.
“That’s why real estate and related stocks, except for the biggest companies, have become untouchable,” he said.
The collapse of Urban was the largest in debt terms by a listed Japanese company since financial firm First Credit Corp fell in 2002, and follows the failures of mid-sized developers Suruga Corp and Zephyr Co.
Urban’s collapse also hit its main lender Hiroshima Bank Ltd, whose shares fell 2.9% to 396 yen after it cut its first-half profit forecast to write down unsecured loans to Urban.
Urban shares, which have been moved to the Tokyo bourse’s liquidation issue section ahead of its delisting on Sept 14, were untraded, overwhelmed by sell orders at 32 yen, down 48% from Wednesday’s close. — Reuters
Did you find this article insightful?