Asian Markets Update: Scandals Lower Tokyo Markets

Hong Kong's Hang Seng dips while South Korea's Kospi and Taiwan's TWSE sit in the green.

Author:: Kaya Laterman
Publish date:: Jul 13, 2000 6:53 AM EDT

Hong Kong's Hang Seng dips while South Korea's Kospi and Taiwan's TWSE sit in the green.

TOKYO -- Japanese shares sagged in the wake of a large bankruptcy, and yet another tainted milk scandal.

Sogo

, one of Japan's largest department store operators, filed for bankruptcy under court protection yesterday after the government decided not to follow through on its public-fund bailout. The failure is the second largest to date, but the largest in the nonfinancial sector.

The

Nikkei 225

index shed 305.23, or 1.8%, to 17,036.90, while the

Topix

index, which includes all shares listed on the

Tokyo Stock Exchange's

first section, lost 30.24, or 1.9%, to 1574.16. The

Jasdaq

small-cap index gained 0.30 to 86.53, while the Nikkei

over-the-counter

index shed 11.46 to 1782.52.

After taxpayers cried foul over the government's plan to bail out Sogo using public funds, which was similarly used to bail out the banking system, the department store owner decided to file for bankruptcy with debts totaling $18.46 billion. Although the failure of the 170-year old firm put a damper on trading Thursday, many traders felt it was a good thing that the government scrapped its original bailout plan.

"This country has used so much of our money to bail out firms, especially banks. We don't have to do that anymore. Let nature run its course and we should let the firms that can't run a business fail," said one taxpayer and trader at a large Japanese brokerage.

Shares of Sogo fell 30 yen, or 36.1%, to 53 ($0.49), while the

Industrial Bank of Japan

, Sogo's largest creditor bank, slipped 61, or 7.9%, to 715.

Shares of construction firms also dipped lower, as traders suspected the government now will not bail out the ailing sector with public funds. With the construction subindex down 2.6%,

Hazama

lost 12, or 23.1%, to 40.

Meanwhile,

Morinaga Milk Industry

slipped 44, or 11.9%, to 327 on news that as many as 20 children fell ill after drinking the firm's milk. This is the second tainted milk case, following last week's disaster at

Snow Brand Milk Products

, where more than a thousand people became sick. Shares of Snow Brand rose 16, or 4.2%, to 398.

Tech shares fared well, however, with

Softbank

gaining 470, or 4.0%, to 12,100 and

Canon

(CANNY)

rising 160, or 3.1%, to 5310.

The greenback edged slightly higher against the yen to fetch 108.71.

Hong Kong's

Hang Seng

index dipped 102.76 to 17,449.50 as property shares sank.