some very interesting news...frankly, i would disfavor this until we hit 250,000Y.
TOKYO, Feb 10 (Reuters) - As Japan's high-flying "growth" stocks soar, more firms are likely to split their shares this year so as to make their share prices more affordable for individual investors, analysts say.
Japanese companies, once criticised for ignoring individual investors, are now paying serious attention to small players as they assume an increasingly large role in equities trading.
Individual investors accounted for 29 percent of total trading on the Tokyo Stock Exchange's first section last year, up from 17 percent the previous year, as they get fed up with minuscule bank interest and look elsewhere for higher returns.
Strong demand among individuals for better investment opportunities was reflected in last week's successful launch of Japan's largest investment trust by Nomura Securities' asset management unit.
Of its initial subscription of 792 billion yen ($7.29 billion), more than 600 billion yen came from individual investors.
But recent huge rises in technology and Internet shares have sent their prices sky-high, deterring potential individual investors.
"It's hard to recommend stocks to customers these days. When they are popular, prices are almost always out of reach," one brokerage trader said.
For instance, it now costs some three million yen to buy shares in Sony , based on its Wednesday closing price of 29,570 yen, as its minimum trading unit is 100 shares.
TARGETING POSTAL SAVINGS DRAINAGE
Fuelling the drive to entice individuals and keep them in the stock market is the expectation that huge amounts of money will be withdrawn from postal savings this year.
The Posts Ministry expects 58 trillion yen of postal savings to mature in the business year starting in April.
Of that amount, 27 trillion yen, equivalent to 14.6 percent of the TSE's total turnover in 1999, is expected to be withdrawn as Japanese savers search for better investments.
"Not all of this will be coming to the stock market. But share splits would make it so much easier for individual investors to participate in stock trading," said Hirokazu Kabeya, market analyst at Daiwa Institute of Research.
Besides luring investors by lowering share prices, stock splits have a powerful effect of attracting buyers by heightening the issuer's image as a growth-oriented firm, analysts said.
"Splitting your shares is like declaring your confidence in continued growth in the future. That's how the market sees it," said Koji Hatano, a strategist at Sakura Institute of Research.
Following a December announcement that it will conduct a two-for-one share split in May, for shareholders as of March 31, Sony shares surged by 26 percent in just four trading sessions.
Names of companies that have recently announced share split plans would make a roll call of Japan's key growth stocks, such as game makers Konami and Square , and Internet portal Yahoo Japan .
Yahoo Japan became the first Japanese stock ever to trade above 100 million yen just three trading days after it said in January it would split its shares two-for-one in May, for shareholders as of March 31.
It rose by its daily limit of two million yen to 121 million on Thursday morning. As one of Japan's few genuine Internet stocks, Yahoo Japan shares are expected to remain on an uptrend even after the share split, boosting buying interest in a wide range of Internet-related stocks, said Motoharu Sone, an analyst at Universal Securities.
High-flying, high-priced issues such as Internet investors Softbank Corp and Hikari Tsushin are expected to follow suit in splitting their shares, traders said.($1=108.70 Yen) |
