Monday June 19 2:58 AM ET
Nasdaq Japan Takes Modest First Step
By Keiko Kanai
OSAKA, Japan (Reuters) - The Japanese sibling of the tech-studded U.S. Nasdaq market opened its doors on Monday, inviting investors and listing aspirants into an era of opportunity but ushering in new competition for other markets.
``We are about to take a very, very important step in the world of financial activity,'' National Association of Securities Dealers (NASD) chairman Frank Zarb said at the opening ceremony.
``In a little more than a year's time, we will have a stock market here that will be an important set-piece for all of Asia -- a market that is interconnected by way of the Internet not only to the rest of Asia, but to all of the Americas and all of Europe,'' he said.
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The launch of Nasdaq Japan puts co-founder NASD -- parent of the U.S. Nasdaq -- one step ahead of the New York Stock Exchange in the race to create a 24-hour global market.
The new market, launched jointly by NASD and major Japanese Internet investor Softbank Corp as a new section of the Osaka Securities Exchange, is expected to see some 70 issues traded on the market by the end of the year.
Small Beginnings, Big Ambitions
``We are starting very small, and we are starting very carefully and for the rest of the next year, we will be building very carefully,'' Zarb said. But the market clearly has ambitions.
``The result is that companies all over the world will be able to raise capital outside their home country, that investors will be able to invest in companies outside their home country,'' he said. ``This is the first time such a step has been taken.''
The highly publicized launch, however, was marked by a moderate share price performance with some investors inclined to watch and wait to see if the market functions without glitches.
Officials said there were no problems.
``I'm glad we managed to get the market started smoothly,'' said Softbank chief Masayoshi Son. ``It's like having a new baby.''
Trading was also subdued because of a lack of big high-tech names in the first group of companies, and investor caution ahead of Japanese elections next Sunday and the U.S. Federal Reserve's rate-setting Federal Open Market Committee on June 27-28.
Eight companies -- four initial public offerings (IPOs), two ex-OTC (over-the-counter) issues and two dual-listings with conventional markets -- started trading. All are seen as financially sound but not necessarily glamorous.
``It's a healthy start,'' said Hiroichi Nishi, deputy general manager at Nikko Securities. ``The first trading prices show the market's quite enthusiastic, but not overheated.''
Job agency Creek & River Co Ltd, an IPO stock, ended at 3.48 million yen, down from its IPO price of 3.5 million yen, while game software distributor Digicube Co Ltd, which left the OTC market for Nasdaq Japan, closed at 2.8 million yen, down from the previous day's close at 2.85 million yen.
One notable exception was Sugi Pharmacy Co Ltd, which rose by its daily limit of 1,000 yen to 9,000 yen, after first trading at 8,000 yen and up from its IPO price of 7,000 yen. The growth potential of drug stores in a country with a rapidly aging population attracted investors.
The overall low-key debut was in sharp contrast to the launch of the Tokyo Stock Exchange's rival Mothers market for high-tech startups last December, when the first group of firms traded at huge premiums over their IPO prices amid the Internet craze.
The initial surge in Mothers shares was followed by a sharp decline in line with U.S. technology and Internet stocks.
Market In The Making
Looking forward, Nasdaq Japan is likely to emerge as one of the winners from Japan's increasingly fierce inter-market competition, helped by its internationally renowned brand name and advanced technology, pundits say. ``Nasdaq (Japan) has got two big advantages. One is the name. The brand. The U.S. Nasdaq,'' Gary Evans, strategist at HSBC Securities told Reuters Television.
``It's also potentially got the technology although it seems that it hasn't yet. It's got to be a year away from implementing full U.S. technology... So I think, given that, Nasdaq's probably one of the survivors.''
Nasdaq Japan uses the OSE's trading system initially, and this allows only auction-style transactions.
But it plans to introduce a new trading platform early next year that would give investors a U.S. Nasdaq-style market-maker system, as well as the existing auction system.
Investors were quick to point out that a snap judgement may be unwise on the long-term prospects of the new market based on its first day because some attractive prospects are in the pipeline.
After an initial listing rush on Monday, online investment adviser Morningstar Japan KK will become the first Softbank unit to join Nasdaq Japan on Friday, followed by other vibrant cyber firms in the Softbank group, such as online broker E+Trade Japan KK, adding a real Nasdaq flavor to the market.
(With additional reporting by Kiyoshi Takenaka) |
