Investors looked set bail out of Kobe Steel Ltd. on Tuesday, after Japan's third-biggest steelmaker revealed it had fabricated data to show its products met customer specifications in the latest scandal to rock corporate Japan.
Kobe Steel said on Sunday that about 4 percent of the aluminium and copper products that it shipped from September 2016 to August 2017 were falsely labelled as meeting the specifications requested by customers.
The misconduct involved dozens of staff and possibly stretched back 10 years, the company said.
The admission from the steel and aluminium maker follows similar scandals at Japanese companies including Nissan Motor, Mitsubishi Motors and Takata Corp. Toshiba Corp. is still battling the fallout of a scandal involving reporting inflated profits.
"The impact on financials is unclear, but could be substantial depending on request(s) for replacement/recall," Jefferies analyst Thanh Ha Pham said in a note. "Handling the situation is key to avoid long-term reputation damage."
UACJ, Japan's biggest aluminium maker, may be a beneficiary of the scandal, he said. UACJ shares were up 3 percent at around 0354 GMT.
Shares of Kobe, on the other hand, looked set to plunge as sell orders outpaced bids by a factor of roughly 20 to one in early trade. The Tokyo bourse was closed for a national holiday on Monday. On Friday, the shares rose 2 percent to 1,368 yen.