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To: Edwin S. Fujinaka who wrote (4321)	3/9/2000 3:20:00 AM
From: Edwin S. Fujinaka	Read Replies (1) \| Respond to of 6020

More stuff on the Japanese OTC Market from Nikkei Net: Wednesday, March 8, 2000 ANALYSIS: Growing Pains Hit OTC market TOKYO (Nikkei)--The over-the-counter stock market has been attracting investors in droves, their funds flowing into high-growth companies in sync with rising popularity worldwide, since mid-1999, of Internet-related issues. Despite uncertain factors such as fast-rising prices, the market value of OTC companies has reached 31 trillion yen, about four times the figure for the fall of 1998. With the establishment of the Mothers section of the Tokyo Stock Exchange and the coming Nasdaq Japan in June, competition among the bourses over the listings of promising companies is expected to intensify. "In 1999 the Japanese OTC market reported the highest growth of any major market in the world except for Turkey during its recovery from the earthquake," says Masaki Motomura, a researcher at Nomura Securities Financial Research Center. The Nikkei OTC average, the primary index of the market, closed at 2,324 yen on Mar. 7 after falling for five straight days from the beginning of March, a 10% drop. But the index is still about four times what it was in the fall of 1998. Yahoo Japan Corp. (4689) is a typical high-flying issue in the market, closing at 133 million yen on Tuesday. Its IPO price was 2 million yen in November 1997. Although some point out the price is too much valued, foreign investors who figure Net-related issues in the U.S. are staying too high bought the issue. Japanese investors who wanted to get higher yields than through bank deposits bought up the issue, too. The OTC market, which is run by the Japan Securities Dealers Association, lists about 870 issues. Many high-growth companies now on the first section of the TSE were once OTC, such as Softbank Corp. (9984), currently valued at about 14 trillion yen, Hikari Tsushin Inc. (9435) and Fancl (4921). About 120 companies will list there this year, 60% more than last year. JSDA Chairman Shoichi Kato is proud of "the results of reform," including a new pricing system, introduced in December 1998, that was modeled on Nasdaq in the U.S. and has sustained the market. In this system, securities companies are actively involved in pricing to maintain the liquidity of OTC issues, where trading can sometimes be one-way and sluggish. In the OTC market, the number of issues qualified for pricing this way has grown to nearly 100, and they contribute 20-30% of transactions. Competition among the markets will only increase. The TSE opened Mothers in November 1999 to list three issues, while the Osaka Stock Exchange set up a new section in late 1998. In partnership with Softbank, the National Association of Securities Dealers in the U.S. will open Nasdaq Japan. "The sort of market where companies can hang on with no chance of growth will soon die out," says President Yoshitaka Kitao of Softbank Finance Corp. While 484 companies made fresh Nasdaq listings in 1999, 723 were disqualified. Nasdaq Japan will apply equally strict criteria for qualification to maintain the quality of the issues it carries. On the OTC market, only eight issues were disqualified in 1999. There, the top ten companies account for half the total market value. Transactions are concentrated on a small number of popular issues, while about 30% of issues are more or less dormant. With the rise of online brokerages, even Nasdaq's raison d'etre is in question. The OTC market can no longer be content as a bush-league market that companies can hope to occupy before moving up to the majors. (The Nihon Keizai Shimbun Wednesday morning edition) --------------------------------------------------------------------------------