Contagion Concerns Slam Japanese Financials As Toshiba Crashes 50% In 3 Days

Tyler Durden's picture

After two days of total carnage in Toshiba stocks, bonds, and credit risk, the bloodbath continues with the once-massive Japanese company is collapsing once again in early trading - now down 50% in 3 days. Following the semiconductor and nuclear business catastrophes, the company had nothing to add regarding today's crash but more worryingly the massive loss of market cap is spreading contagiously to Japanese financials with Sumi down 4%, and MUFG down almost 3%.

 

As we noted yesterday, Tsunukawa said that “I apologize to shareholders, business partners and all stakeholders for the trouble we have caused,” after Toshiba said cost overruns at U.S. nuclear reactors it is building were likely to force a write-down of as much as several billion dollars, clouding its turnaround plan after the 2015 accounting scandal. Specifically, the company said it may have to book several billion dollars in charges related to a U.S. nuclear power plant construction company acquisition, rekindling "concerns about its accounting acumen."

The problem is that the nuclear business, together with the semiconductors, has been positioned as one of key pillars underpinning Toshiba's growth which has been trying to shift away from its consumer electronics core. Alas, the latest gaffe now means that much of Toshiba's growth is gone, and the stock price reflect that overnight, when Toshiba's stock plunged by 20%, the most permitted, before it was halted for trading.

The derisking is weighing heavily on USDJPY...

 

And now, as Bloomberg reports, Japanese financials are tumbling on cross-default, contagion concerns...

Sumitomo Mitsui Trust Bank has highest capital exposure to Toshiba, with loans equaling 5.5% of the bank’s equity, analyst Shinichiro Nakamura writes in report.

 

SMTB would also suffer greatest earnings hit, with a Toshiba impairment charge of 100b-190b yen shaving ~9.9% off bank’s current profit for fiscal year to March 31: SMBC Nikko ests.

 

If Toshiba impairment charge reaches over 400b yen, banks may conduct debt/equity swap; would lower near-term earnings impact while carrying risk of preferred shares losing value

 

In 3rd scenario, Toshiba could undertake private placement with strategic partner; major banks would be limited to funding support but could be asked to waive claims

Sumitomo Mitsui Trust shares fall as much as 4%, MUFG -2.6%, Mizuho -2.4%, SMFG -2.4%

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FuckJanetYellen's picture

Fukashima surprise

 

bytebank's picture

Fukushima will take down the world. One way or another.

Raffie's picture

Could be worse like %51.

Never cared for Toshiba.

Raffie's picture

If it keeps going you will buy the cliff.

kommissar's picture

those nips sold us out to the ussr!! fuck them.  i've never bought anything from them ever since, regardless of any other bidness reason.  they deserve to go down the shitter.  we had a 10 year lead in submarine propulsion that they sold for money to the ussr!  they didn't deserve the protection our subs gave them at the time.

DIE TOSHIBA! DIE!!!

http://www.nytimes.com/1987/06/22/opinion/submarined-by-japan-and-norway...

Ranger611's picture

HOLY SHIT, JUST BOUGHT A SAMSUNG TV FOR CHRISTMAS AND IT BLEW UP!

 

floomby's picture

That is Korea.... not Japan.

LetThemEatRand's picture

I called DB bouncing off its lows (sad to say I did not get in at my bid and missed it).  I'd say Toshiba is toast.  It's not a bank and it's not systemically important to bankers.  Yeah some bankers will take a hit, but the big boys will make moar selling it off in pieces.

wisehiney's picture

Highly deflationary.

Yen Cross's picture

   WTF is Toshiba doing building U.S. nuclear reactors? I though GE handled that.

 Yeah, I want some crappy Japanese company building reactors here in the states! NOT!

King Tut's picture

GE is too busy building shitty home appliances 

Yen Cross's picture

lol. I agree, & Toshiba builds shitty laptops.

moorewasthebestbond's picture

12 month warranty... kaboom at 14 months... never again.

Monopolist's picture

Mine is surprisingly still going strong after five years of heavy useage. However, I am looking at a replacement and it will definitely not be a Toshiba. Their current offers suck and add to that too many bad reviews.

jmack's picture

my toshiba laptops are going strong after 2 and 4 years...wish I could say the same for the shit ass msft operating system on the 4 yo laptop... ah well, linux beacons.

 

 

Abbie Normal's picture

and the shitty Fukushima reactors were also designed by GE.  Looks like turnabout is fair play with Toshiba building them in the USA.

Ranger611's picture

NAW GE IS SECOND IN LINE MAYTAG TAKES THE SHIT TROPHY!

stumpknocker55's picture

according to what I read today the Chinese are supplying critical components to nuclear reactors under construction per mandate of the NRC in 2013.  I'd rather have Japanese engineering over the chicomms any day

Yen Cross's picture

  I certainly can't disagree with that thinking.[ thanks for the intel, and perhaps you can supply a link]

  I'm just taken back by the fact that critical infrastructure is even being outsourced, when TOTUS has everyone working three part time jobs at the local mall.

jmack's picture

limit down over 3 days is 60%, this is bullish, buy the effing dip!

Abbie Normal's picture

20% down for three days in a row is 48.8% cumulative.

floomby's picture

You should carefully rethink how you did your math there.

jmack's picture

it was my understanding that there would be no math in ZH comments threads.....

MASTER OF UNIVERSE's picture

The first AM\FM stereo clock radio that I bought is a Toshiba, and it is on my workbench in the basement still working fine after 43 years. Sorry to hear of Toshiba's demise, but it looks like my old clock radio is going to outlast the comapny that built it.

stumpknocker55's picture

Hope this doesn't kill their laptop and mass storage business.  Both Toshiba laptops and their hard disk drives are very high quality.  Leave it to mergers and acquisitions to F things up.

bluskyes's picture

Cant speak for mass storage, but all their laptops turned out to be shite for us.

Thinkpads turned out much better

JamesB's picture

Only in a bizzaro world of Japan does a company problem like that cause the currency to rise...

Maybe if every company in the country declares bankruptcy, the yen will strengthen to $1 and the japanese will be able to buy all of the US with printed money.

Phillyguy's picture

Japan update.
Despite PM Shinzo Abe’s 3 arrows- monetary easing, robust fiscal policy and policies to increase growth and private investment, the Japanese economy continues to decline, as it has done for the last 3 decades (the “lost” decades) Link: www.tofugu.com/japan/abenomics-3-arrows/
50K US troops (& nuclear weapons) still occupy Japan, 70 years after the end of WWII.  This begs the obvious question, did PM Abe or anyone else in Japan learn anything from WWII? Japan would be far better off closing all US military bases and charting an independent foreign policy. The growth engine in Asia is China and the new Silk Road linking Asia to Europe, creating the most dynamic trading block in world history. Link: www.forbes.com/sites/wadeshepard/2016/11/22/what-win-win-along-the-new-s...


peterk's picture

Toshiba is a giant in japan...... Now that the bond markets  have cracked in japan,  i think this will be the pebble that unleashes

a tidal wave.

Once JAPAN INC. gets in trouble, owing to their "lender of FIRST resort" status, the YEN will SURGE  (carry trade unwind) just like  early 2016

and  it will spread to  US EUROPE AUSTRALIA/ASIA CHINA.

Yen Cross's picture

    What a crazy world we live in.  When the financial Godzilla comes ashore, the currency [¥]  strengthens. Japan got big time saved from the recent rise in CL prices.

 Their economy is in the shitter if you strip out energy costs.

SmittyinLA's picture

The US NUKE design problems are political, not technical

blargg's picture

Well great, I bought some of their SD cards and was counting on their warranty being valid for five years.

buzzsaw99's picture

i'm confused. why is the boj not buying that stock until the price goes back up?