caudio51
BoM Nov '05; Mar '06
http://www.msnbc.msn.com/id/10900819/
[FONT=Georgia, 'Times New Roman', Times, serif]Selling stampede shuts Tokyo stock market [/FONT]
Capacity constraints trigger closure of world's second biggest bourse
[FONT=Verdana, Arial, Helvetica, sans-serif]Reuters[/FONT]
[FONT=Verdana, Arial, Helvetica, sans-serif]Updated: 6:54 a.m. ET Jan. 18, 2006[/FONT]
[FONT=Verdana, Arial, Helvetica, sans-serif]TOKYO - A stampede of sell orders forced the shut-down of the worlds second-biggest stock exchange on Wednesday as investors fled the Tokyo market, spooked by fall-out from an investigation into Internet company Livedoor.[/FONT]
[FONT=Verdana, Arial, Helvetica, sans-serif]The Tokyo Stock Exchange, where shares were down more than 4 percent at one point, suspended trading 20 minutes before the normal closing time after the number of trades threatened to exceed its computer systems capacity of 4.5 million per day.[/FONT]
[FONT=Verdana, Arial, Helvetica, sans-serif]It the first time that the exchange was forced to halt trading as a result of capacity constraints since it opened its doors in its current incarnation in 1949.[/FONT]
[FONT=Verdana, Arial, Helvetica, sans-serif]Livedoor, a favorite of small investors, was raided by prosecutors on Monday. The firm is suspected of fudging financial reports and spreading false information to boost its share price.[/FONT]
[FONT=Verdana, Arial, Helvetica, sans-serif]News of the raid extended a sell-off that has wiped out more than $300 billion in shareholder value -- about equal to the gross domestic product of Sweden -- in just three days.[/FONT]
[FONT=Verdana, Arial, Helvetica, sans-serif]The current situation is totally unexpected. My guess is that Livedoors investigation news spooked individual investors and prompted them to sell broad-based stocks, Tokyo Stock Exchange President Taizo Nishimuro told a news conference.[/FONT]
[FONT=Verdana, Arial, Helvetica, sans-serif]The exchange has been hit by a series of recent system problems, including a glitch that halted trading for almost a full day late last year.[/FONT]
[FONT=Verdana, Arial, Helvetica, sans-serif]Wednesdays shut-down dealt another blow to the image of the exchange, which has plans to list its own shares.[/FONT]
[FONT=Verdana, Arial, Helvetica, sans-serif]It is an embarrassment for this to happen in the worlds second-largest economy and thats the emotional aspect of the debate, said Hideo Ueki, chief investment officer at UBS Global Asset Management Japan.[/FONT]
[FONT=Verdana, Arial, Helvetica, sans-serif]But this problem will likely add to the growing negative sentiment in the market. Im pretty sure the NYSE has only had to shut down for snow or a black-out.[/FONT]
[FONT=Verdana, Arial, Helvetica, sans-serif]Nishimuro said that the bourse, which had already planned to increase capacity to 5 million shares on Jan. 30, would consider shortening trading hours on Thursday and beyond if necessary.[/FONT]
[FONT=Verdana, Arial, Helvetica, sans-serif]The number of transactions had reached about 4 million by 2:25 p.m., just before trade was halted.[/FONT]
[FONT=Verdana, Arial, Helvetica, sans-serif]Individual investors, reform worries
News that the exchange was considering a shut-down accelerated selling across the board, pushing down the Nikkei share average by more than four percent to as low as 15,059.52.[/FONT]
[FONT=Verdana, Arial, Helvetica, sans-serif]The Nikkei clawed back to finish down 2.94 percent at 15,341.18 but that was still its biggest one-day fall since April 18, 2005, when it fell 3.8 percent. The broader TOPIX index fell 3.49 percent to close at 1,574.67.[/FONT]
[FONT=Verdana, Arial, Helvetica, sans-serif]Weaker-than-expected earnings by U.S. chipmaker Intel Corp. also weighed on the market.[/FONT]
[FONT=Verdana, Arial, Helvetica, sans-serif]The share-price tumble also hit the yen, which fell to a days low of 115.88 yen to the dollar, before recovering to around 115.60.[/FONT]
[FONT=Verdana, Arial, Helvetica, sans-serif]The problem has caused a selling climax. Everyone is throwing in sell orders, said Ken Masuda, a senior dealer at Shinko Securities shortly before trade was halted.[/FONT]
[FONT=Verdana, Arial, Helvetica, sans-serif]Even after five minutes, orders arent going through. This is ridiculous, he said.[/FONT]
[FONT=Verdana, Arial, Helvetica, sans-serif]Concern over Livedoor
Investigators from the Tokyo District Prosecutors office and the Securities and Exchange Surveillance Commission raided the Tokyo headquarters of Livedoor late on Monday on suspicion that the company had spread false information to investors.[/FONT]
[FONT=Verdana, Arial, Helvetica, sans-serif]Newspaper reports on Wednesday said the company was also suspected of tampering with its financial reports.[/FONT]
[FONT=Verdana, Arial, Helvetica, sans-serif]The investigation has scared off individual investors, who were a major factor in the Nikkeis 40 percent rise last year. Only last Friday, the Nikkei hit a five-year closing high.[/FONT]
[FONT=Verdana, Arial, Helvetica, sans-serif]Individual investors now account for about 40 percent of all trades on the Tokyo, Osaka and Nagoya stock exchanges, up from 30 percent last year.[/FONT]
[FONT=Verdana, Arial, Helvetica, sans-serif]The Livedoor affair also cast a cloud over the aggressive acquisition strategy and money deals practiced by the firms maverick CEO, Takafumi Horie, and sparked some concern about damage to Prime Minister Junichiro Koizumis reform agenda.[/FONT]
[FONT=Verdana, Arial, Helvetica, sans-serif]Horie, 33, ran unsuccessfully for parliaments lower house as a ruling party candidate last September and Koizumis right-hand man on economic reforms, Internal Affairs Minister Heizo Takenaka, campaigned for him.[/FONT]
[FONT=Verdana, Arial, Helvetica, sans-serif]Analysts and some investors themselves said, however, that individuals would resume buying once the Livedoor fuss settled down, given Japans recovering economy and corporate earnings.[/FONT]
[FONT=Verdana, Arial, Helvetica, sans-serif]The past two days have been a warning to the market that things have gone too far and that things have started to look like a bubble, said Masayasu Higuchi, 77, who works for a fishing equipment maker, after selling some shares at a packed day-trading center in the Kayabacho, Tokyos Wall Street.[/FONT]
[FONT=Verdana, Arial, Helvetica, sans-serif]I will wait for the market to settle and when the time is right I want to invest again, he added.[/FONT]
[FONT=Verdana, Arial, Helvetica, sans-serif]Copyright 2006 Reuters Limited. All rights reserved. Republication or redistribution of Reuters content is expressly prohibited without the prior written consent of Reuters.[/FONT]
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