Tokyo - Japan's financial sector has been plagued by a
series of bankruptcies of real-estate firms, giving rise to worries
about Japan's economic outlook and having an impact Thursday on the
stock exchange.
While the world's second-largest economy has been spared the worst
effects of the US mortgage and credit crisis, rising debt among its
real-estate firms has caused worry among Japan's banks and investors.
The latest failures came this week with home builder Sohken Homes
Co and property developer Sebon Corp.
Sohken Homes declared bankruptcy under 33.89 billion yen (310
million dollars) of debt, saying failures among other firms in the
industry had led to difficulty in refinancing its debt. Its shares
are to be delisted on September 27.
The bankruptcy declarations continued to impact investors' moods
Thursday on the Tokyo Stock Exchange, where the broad Topix index of
all first-section issues fell 0.34 per cent to 1,219.53 while the
benchmark Nikkei 225 Stock Average saw a slight gain of 0.12 per
cent, closing at 12,768.25, as investors picked up some bargains
after two previous days of declines.
The largest bankruptcy in the sector this year has been Urban
Corp, which filed for court protection from its creditors this month
with 255.83 billion yen in debts.
Tokyo Shoko Research said the wave of bankruptcies was the highest
in five years.
The problems in Japan's real-estate sector stem from the downturn
in the economy and rising raw-materials prices, but also playing a
role are more stringent construction regulations the government
imposed last year after the construction of residential buildings
that did not meet earthquake codes.
Experts said the difficulties among developers is causing the
greatest worries among small and mid-sized regional banks, which
provide credit to real-estate firms.
USA
Your Talkback on this Story