Tuesday, March 14, 2000
Crayfish Debut Highlights Differences In U.S., Japan Markets
TOKYO (Nikkei)--Crayfish Co. (4747) debuted last week on the Nasdaq Stock Market in the U.S. and the Market of High-Growth and Emerging Stocks, or Mothers, of the Tokyo Stock Exchange. The first simultaneous public offering in Japan and the U.S. drew considerable attention. However, a two-day gap in the start of trading due to differences in the markets' systems resulted in a sharp rise in the price of Crayfish stock on the first day in the U.S. and a plunge during its debut in Japan.
Crayfish shares closed at just over five times the IPO price on the Nasdaq on March 8, the 10th-largest percentage increase for a public offering in U.S. history.
But on March 10 in Tokyo, trading started at a guideline price of 67.55 million yen, obtained by converting the closing quotation from the first day of trading on the Nasdaq into yen, not the IPO price of 13.2 million yen. Crayfish shares remained asked-only and closed at 45 million yen without being sold due in part to the bearish market sentiment for information/telecommunications issues. Sell orders led buy orders on the second day as well, and the issue traded for the first time at 25 million yen.
One of the reasons for the phenomenon is the lag in the start of trading between Japan and the U.S. The IPO price was decided on March 6 in both countries and the firm's capital was increased on March 10 in both places. However, trading started on March 8 in the U.S. and on March 10 in Japan. The TSE attributes the gap to a difference in the systems of the two countries.
In the U.S., trading of a new issue starts the day after the price is decided, whereas transactions begin the day following the payment date in Japan.
Trading in Crayfish shares through March 13 made it clear that the two stock markets had a great influence on determining the stock price. Stock exchanges and market authorities in both countries will need to find a better way to arrange simultaneous public offerings.
(The Nihon Keizai Shimbun Tuesday morning edition)
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