Japan's Space One shareholder companies experience a decline in stock prices, with Canon Electronics leading the way, following the explosion of a rocket.

• The Kairos rocket, powered by solid fuel, exploded moments after takeoff at 11:01 a.m. Japan time, according to Reuters.
• In 2018, a consortium comprising of Japanese companies such as Canon Electronics, IHI Aerospace Co, and construction firm Shimizu, along with the Development Bank of Japan, established Space One.

On Wednesday, Japan's shares dropped by 12.7% after the explosion of a small rocket launched by Tokyo-based Space One, which occurred just moments after its maiden launch.

According to Reuters, Japan's Space One would have been the first Japanese company to place a satellite in orbit if the Kairos rocket had successfully launched at 11:01 a.m. Japan time. However, the rocket exploded just seconds after takeoff.

In 2018, Space One was established by a group of Japanese companies, including Canon Electronics and a construction firm, with the Development Bank of Japan and two of Japan's largest banks also holding minority stakes in the company.

In midday trading, Japan's broader Topix index shed 0.5%, while IHI and Shimizu fell about 1%, and the banks edged lower after the failed launch.

Space One had postponed the launch, which was initially scheduled for Saturday.

Reuters reported that Space One has not disclosed launch costs, but an executive previously stated that the company is competitive enough against its American rival.

Over 40 "Electron" small rockets have been launched by Rocket Lab from New Zealand since 2017.

— CNBC's Michael Sheetz contributed to this story.