News--Bloomberg:>>>Nasdaq Japan Opens for Business as Eight Stocks Trade (Update3)
quote.bloomberg.com
Mon, 19 Jun 2000, 4:54am EDT
By Jason Singer
Osaka, June 19 (Bloomberg) -- Nasdaq Japan Inc. opened today with eight companies trading on the first overseas Nasdaq market, providing Japanese start-ups and technology firms with a new avenue for raising funds.
The joint venture between the National Association of Securities Dealers and Japan's Softbank Corp., one of the world's biggest Internet investors, inaugurated the second market targeting new companies and technology firms in Japan in six months.
``Now there are at least two places for startups to go, where a year ago there were none,'' said Kenneth Courtis, Goldman Sachs Group Inc.'s Asia vice chairman.
Nasdaq Japan is the first leg of a plan that would eventually link markets in the U.S., Europe and Asia in a unified system that runs 24-hours a day.
First it must find a way to ensure enough buyers and sellers of small companies are consistently matched, something its rivals, including the Tokyo Stock Exchange's ``Mothers'' board for startups, which opened in December, and an over-the-counter market opened last year, have yet to achieve.
Nasdaq Japan says it's working on ways to overcome legal restrictions on the number of shares small companies can issue -- which hinders liquidity -- though there's no solution yet.
Digicube Co., Creek & River Co., Xnet Corp. and five other companies opened for trading after a 20-minute ceremony, during which NASD Chairman Frank Zarb, Softbank President Masayoshi Son and Nasdaq Japan Chief Executive Tatsuyuki Saeki cut a red and white ribbon and presented executives of the eight companies with Waterford crystal bowls.
Labour Protest
Outside the Osaka Securities Exchange, a local labor union organized a protest against Nasdaq Japan. The group of about 40 people carrying placards said the Osaka market would become less hospitable to regional companies.
Of the first eight companies, four recently completed initial public offerings, two had their shares transferred from the over- the-counter exchange and two started second listings.
Sugi Pharmacy Co., a drugstore chain operator, rose as much as 29 percent to 9000 yen from its initial offering price of 7000, with 4.54 billion yen of shares traded. Creek & River Co., a human resources staffing company, rose as much as 2.3 percent to 3.58 million yen from its opening price of 3.5 million yen, with 797.9 million yen of shares changing hands.
Xnet Corp., an information system services provider, gained 15 percent to 6.3 million yen, and Digital Design Co., a computer software developer, rose 20 percent to 1.8 million yen.
Digicube Co., which sells computer game software, Masternet Co., a Internet mail service provider, Don Quijote Co., discount stores operator, and Honda Verno Tokai Co., which sells passenger cars, moved their shares to Nasdaq Japan from the over-the-counter market.
Illiquid Trade
Morningstar Japan K.K., which provides rating services for mutual funds, starts trading on Friday after an initial public offering.
Digicube's trading illustrated the liquidity problem Nasdaq Japan faces: just five of its total 1,700 shares changed hands.
Nasdaq Japan executives have said that the new stock market will have systems in place once it starts using new trading technology in about a year, which will implement Nasdaq's market maker system of brokerages obligated to buy or sell certain shares at prices they set.
Officials are also lobbying the government to change the commercial code to enable companies to sell more shares without prohibitive costs.
``The laws should be changed,'' Softbank's Son said. ``We are working very hard to get the laws changed.''
Fund managers are optimistic, despite the problems involved.
``From a fund manager's point of view, Nasdaq Japan next year is far more exciting than Nasdaq (this) week because there will be more companies that I can participate in,'' said David Scott, a fund manager at Jardine Fleming Investment Trust and Advisory Co., which manages $28 billion in Japanese equities.
Nasdaq Japan plans to sell stakes to other brokerages and securities firms this year and is considering an initial public offering of its own, possibly this year, NASD's Zarb said.
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