Nasdaq Japan Takes Modest First Step : LUSENET : TB2K spinoff uncensored : One Thread

Sunday June 18 10:35 PM ET

Nasdaq Japan Takes Modest First Step

By Keiko Kanai

OSAKA, Japan (Reuters) - A Japanese sibling of the tech-studded U.S. Nasdaq market opened its doors on Monday, inviting investors and listing aspirants into a new era of opportunity and ushering in new competition for market operators.

``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.

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, created 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 in the history of the world.''

The highly publicized launch, however, was marked by moderate initial trading with some investors inclined to watch and wait to see if the market functions without glitches, rather than take a leap into the unknown.

Officials said there were no problems at the launch.

``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 high-tech big 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.

Job agency Creek & River Co Ltd, one of the four IPO stocks, was first traded at 3.54 million yen, up slightly from its IPO price. It stood at 3.6 million yen at 0117 GMT.

Xnet Corp, another IPO issue, was first traded at six million yen, compared to its IPO price of 5.5 million yen.

One exception was Sugi Pharmacy Co Ltd, which rose by its daily limit of 1,000 yen to 9,000 yen after initially trading at 8,000 yen compared to the IPO price of 7,000 yen. The growth potential of drug stores in a country with 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 were traded at huge premiums over their IPO prices.

Traders, however, regarded the initial performance on Japan Nasdaq as healthy rather than disappointing.

``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.''

Market In The Making

Market players were also quick to point out, however, that it may be unwise to make a snap judgement on the long-term prospects of the new market based on its first-day performance because some very 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, followed by other vibrant cyber firms in the Softbank group, adding a real Nasdaq flavour to the market.

``For some people, the real opening of Nasdaq Japan is when Morningstar joins later in the week,'' said a trader with one Japanese brokerage said.

-- (, June 19, 2000

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