Nasdaq Ends Japan Venture; Companies Mull Delisting (Update4)
Nasdaq Ends Japan Venture; Companies Mull Delisting (Update4)
(Updates with Moss Institute considering moving listing in
13th paragraph.)
New York, Aug. 16 (Bloomberg) -- Nasdaq Stock Market Inc. is
ending its Nasdaq Japan venture after two years of losses, dealing
a fresh blow to its goal of a 24-hour global exchange. The news
prompted some companies to consider leaving the market.
The 98 companies listed on Nasdaq Japan will switch to the
Osaka Securities Exchange, which provides the venture with floor
space and technology, said John Hilley, chief executive of Nasdaq
International, in an interview. The alliance will end on Oct. 15,
and Nasdaq will withdraw the use of its name by the end of the
year, the Osaka Exchange said in a release.
Nasdaq has been trying for four years to reduce its reliance
on the U.S. market, where its position is being eroded by
cheaper electronic networks. More than a third of trading in
Nasdaq shares take place outside the exchange. Nasdaq Japan has
been losing money for two years, and signed up less than two-
fifths of targeted companies.
``When we made the decision to start Nasdaq Japan in the
midst of the biggest bull market the U.S. has ever known. We
walked into a three-year correction just as we got started,'' said
Hilley. ``The end is not in sight.''
Nasdaq Japan's board met at 10 p.m. yesterday New York time
to vote on the decision, said Hilley.
Nasdaq and Softbank Corp., Japan's largest investor in
Internet companies, each own 43 percent of Nasdaq Japan, with the
remaining 14 percent owned by 13 U.S. and Japanese brokerage
firms, including Nomura Holdings Inc. and Goldman Sachs Group Inc.
The decision to end the three-year-old partnership with
Softbank comes after the second-largest U.S. stock market wrote
off its $20 million investment last month.
Softbank said in a statement the dissolution will not have
any financial impact beyond its 1.2 billion yen ($10.2 million)
initial investment.
`Saddened'
``We are hugely saddened and really apologetic about our
inability to find success'' in Japan, said Hilley. ``We are
optimistic about Japan in the long term. But we will now focus on
Europe.''
The withdrawal is the latest blow to Nasdaq's ambitions to
create markets around the world trading Nasdaq-listed stocks.
It attempted unsuccessfully to ally with London Stock
Exchange Plc and Deutsche Boerse AG, operator of Frankfurt's stock
exchange.
When Nasdaq bought the Easdaq exchange in Brussels for $63
million in March last year, it talked about 24-hour global
trading, a link with Nasdaq in the U.S. and its arm in Japan.
Fourteen months later it halted trading of stocks including
General Electric Co., the biggest U.S. company, after only 73
shares were traded in April.
No Change
Trading in Nasdaq Japan's 98 companies won't cease and there
will be no changes to rules or criteria for listing, according to
the Osaka exchange.
Still, losing the Nasdaq name may prompt some companies to
consider listing on rival exchanges.
``We are now considering applying for a listing on the second
section of the Tokyo Stock Exchange,'' said Yoshifumi
Noguchi, an official at Creed Corp., a real estate investment
consultant company, which joined Nasdaq Japan in February 2001.
Moss Institute Co., a supplier of medical services, said it
may consider taking legal action if its shares decline as a result
of the Nasdaq pullout.
``It is a shame. The market will lose the name of Nasdaq,''
Katsuo Nakayama, a director of Moss Institute said.
Moss Institute's shares have fallen by a sixth since listing
on the Nasdaq Japan on Aug. 8 and the company may move its stock
to TSE's Mothers market or Jasdaq, Nakayama said.
Don Quijote Co., an operator of discount stores that sells
everything from consumer electronics to food and sporting goods,
said it may consider delisting its shares if the new market
doesn't live up to Nasdaq Japan's promises, said Mitsuo Kahashi,
head of the company's corporate management and strategic division.
These goals included connecting markets in Japan, the U.S.
and Europe, providing round-the-clock trading, and introducing
different trading methods to attract more investors, he said.
Technology
Nasdaq never put in place a system it had built for the
venture, using instead the Osaka exchange's technology.
In June, Nasdaq Japan said it might seek a new partner after
it blamed the Osaka Securities Exchange for delaying the start of
a trading system Nasdaq built for the venture. Hilley denied that
such difficulties played a role in the decision.
``Osaka discharged its obligation to us,'' said Hilley. ``The
overriding factor in the decision was economic.''
Between June 2000 and December 2001, Nasdaq Japan attracted
82 new companies. Since then, it has only attracted 16 more.
Nasdaq Japan trading totaled 42.7 million shares last month, down
from its peak of 199.7 million shares in January, according to the
exchange's Web Site.
Nasdaq's Hilley will meet the press in Tokyo on Monday at
10:30 a.m. Japan time.
Nasdaq Stock Market plans to sell shares to public investors
in an offering next year. Were that not the case, Hilley said,
Nasdaq might have remained in Japan.
``Ever since we started the path of demutalization, it's been
clear that you have to see an economically viable path in your
ventures,'' said Hilley. |
