The NYT chimes in on Nasdaq Japan:
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June 20, 2000
Nasdaq's Japanese Cousin Off to Slow Start
By STEPHANIE STROM
TOKYO, June 19 _ The Japanese offshoot of Nasdaq began trading eight stocks today in a technically smooth but low-volume start to what represents the first time a stock exchange has tried to go global.
"It's going to take a bit of time to really unfold in its full form, but it's going to succeed," said Frank Zarb, chairman of the National Association of Securities Dealers, which runs the Nasdaq market in the United States. He likened the new market's opening to planting a flag on the moon.
Trading volume was extremely low, with only about 660,000 shares changing hands, as opposed to the hundreds of millions of shares that are routinely traded daily at Nasdaq Japan's American cousin. But the low volume had been expected because Japanese law imposes severe restrictions on how many shares small start-up companies can sell.
Daily limits on price movements in Japan may have contributed to the low volume as well. When shares are driven to extremely high prices, there are difficulties in matching buy orders and sell orders.
Another reason for the low volume today was the impending public offering of shares in the Japanese units of Morningstar, the United States investment research firm, and E*Trade, the online brokerage firm. Those stocks will list over the next couple of weeks, and there was speculation that investors who might have bought shares on the new exchange today were waiting until then.
Of the eight issues that began trading on the new exchange today, four were up, one was unchanged and three fell.
Masternet, an Internet mail service provider that transferred its shares from Jasdaq, the over-the-counter market that historically was Japan's answer to Nasdaq, provided a good example of how an inability to buy and sell might affect the market. Only 18 of its shares changed hands, but that was enough to move its share price by 300,000 yen, or about $2,830 at current exchange rates, to 1.65 million yen apiece.
Given that Nasdaq Japan has ambitions to become the market of choice for the new economy, it was ironic that shares of Sugi Pharmacy, a retail drugstore operator that went public today, were the new market's best performers and accounted for most of the volume. Sugi shares rose 2,000 yen, their limit, to 9,000 yen, with 651,000 changing hands.
While foreign brokerage firms and asset managers have commended Nasdaq Japan for its efforts to enhance disclosure and bring new companies to market, the Japanese reaction has been more tepid.
In part, the muted reaction by Japanese brokers and fund managers reflects a diminished appetite for technology-related stocks, which dominate the new exchange.
Brokers here also note that investors who bought shares that float on Mothers, a similar exchange started in December by the Tokyo Stock Exchange, have largely been disappointed. Seven of the 10 stocks listed there are currently trading below their initial public offering price.
The new market has also been dogged by some early missteps of the National Association of Securities Dealers and its joint venture partner in Nasdaq Japan, the Softbank Corporation, the Japanese Internet investment company. The partners did not give Japanese officials an early warning about their plans, which reportedly rankled some bureaucrats at the Ministry of Finance.
Some of the establishment's wariness of the new market has been reflected in recent stories by the Yomiuri Shimbun, a large conservative daily newspaper.
Its English-language paper ran a story on the front page today headlined, "Nasdaq Japan to face close scrutiny," in which it reported that the Securities and Exchange Surveillance Commission, which polices Japan's markets, would be monitoring the new exchange from its headquarters in Tokyo, not the regional office that oversees the Osaka exchange.
The paper said the agency wanted to guard against the manipulation that can happen when there are a relatively limited number of shares and daily restraints on price movements. But Hiromitsu Mori, deputy director of the coordination and inspection division of the agency, said it also monitors the Mothers exchange from the Tokyo headquarters.
In neither its Japanese version nor its English-language version did the Yomiuri point that out. |
