Japan corporate bankruptcies soar

Corporate bankruptcies in Japan reached 1,360 cases in January, a 15.8% increase on the previous year and a six-year monthly high, new data shows.

Bankruptcies at market listed companies hit a record high of 35 for the year to 31 March, the highest since World War II, said Tokyo Shoko Research.

It said smaller companies have been particularly affected as banks focus on lending to bigger rivals.

Bankruptcies have been especially prominent in the manufacturing sector.

It was the eighth consecutive month that the number of bankruptcies increased.

Several carmakers in Japan and around the world have cut production as consumers grow more cautious about splashing out on big ticket items.

Secondary parts suppliers, and companies involved in the peripheries of the manufacturing trade have also been badly hit by the economic downturn.

Japanese firms are also being hit by the strong yen - which with electronic firms particularly affected.

A stronger yen makes Japanese products less competitive and cuts into the value of overseas earnings.

Tokyo Shoko Research said the number of bankruptcies was not likely to decelerate in the near future as a range of manufacturers - from car and electronics manufacturers to semiconductor makers - continue to see profits hit by economic conditions.