Japanese stocks fell for a second day, with the Topix index underperforming every benchmark in Asia, after an admission by Olympus Corp. (7733) that it covered up losses shook investor confidence in the world’s third-biggest equities market.
The Topix dropped 1.7 percent to 738.03 at the 3 p.m. trading close in Tokyo, extending losses after the optical- equipment maker said it paid inflated fees to advisers to hide investment losses dating back to the 1990s. Olympus dropped 29 percent, leading declines on the Nikkei 225 (NKY) Stock Average, which fell 1.3 percent. Nomura Holdings Inc. tumbled 15 percent to its lowest since at least 1974 after the Olympus scandal sparked concern about Japanese corporate governance.
“Institutional investors will stay away from Japan’s market until they confirm this is an isolated case,” said Koichi Kurose, chief economist in Tokyo at Resona Bank Ltd., which oversees the equivalent of $68 billion. “Some individual investors probably think that if there’s one cockroach, there may be 10 more.”
Declines were limited elsewhere in Asia. The MSCI Asia Pacific Index dropped 0.8 percent to 118.87, swinging between gains and losses, ahead of a parliamentary vote today that may determine whether Prime Minister Silvio Berlusconi can hang onto his majority as Italy faces calls for spending cuts amid the debt crisis. Futures on the Standard & Poor’s 500 Index slipped 0.5 percent.
“People are concerned about the Italian situation now,” said Angus Gluskie, who manages more than $350 million at White Funds Management in Sydney. “We need to see some kind of resolution and improvement there before investors get really comfortable.”
Olympus plunged by its daily limit, dropping 29 percent to 734 yen. The maker of cameras and endoscopes said it hid losses by paying inflated fees to advisers on the 2008 acquisition of Gyrus Group Plc. It was the first admission of wrongdoing from the company since accusations from its former chief executive officer surfaced four weeks ago.
Executive Vice President Hisashi Mori was dismissed over his role in the cover-up, the Tokyo-based company said in a statement today. As of yesterday, Olympus had lost more than half of its market value since CEO Michael C. Woodford was fired on Oct. 14.
Securities firms led declines among the 33 Topix industry groups. Nomura Holdings Inc. (8604) dropped 15 percent to 245 yen, the biggest decline in more than two years. Daiwa Securities Group Inc. (8601) fell 7 percent to 251 yen.
“After Olympus announced the loss cover-up in the press conference, names of the brokerages that may have been involved in the matter were raised in market gossip,” said Yoshihiro Ito, chief strategist at Okasan Online Securities Co. in Tokyo. “So, the brokerage houses may be being sold by short-term speculators.”
Stocks also fell as concern about Europe’s debt crisis flared up. Berlusconi may lose his majority, inhibiting Italy’s ability to implement austerity measures to needed to trim the euro region’s second-biggest debt. The Chamber of Deputies will hold a procedural vote in Rome today that will reflect the prime minister’s level of support.
Electronics makers were the biggest drag on the Topix. Sony Corp. (6758), Japan’s No. 1 exporter of consumer electronics, dropped 4.1 percent to 1,346 yen. Panasonic Corp. (6752) fell 3.3 percent to 702 yen.
Toyota Motor Corp. (7203), the world’s biggest carmaker by market value, fell 1.7 percent to 2,503 yen before announcing its earnings today. The company scrapped its full-year forecast, saying it needed more time to assess the toll on production from Thailand’s floods. Profit fell 19 percent to 80.4 billion yen in the quarter ended Sept. 30, compared with the 103.5 billion yen estimate of analysts surveyed by Bloomberg.
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