|
Japan to get own Nasdaq
|
 |
June 15, 1999: 4:48 p.m. ET
Nasdaq and Softbank form joint venture, but analysts remain skeptical
|
NEW YORK (CNNfn) - Nasdaq announced plans to create a mirror image of itself in Japan Tuesday, drawing immediate skepticism from Wall Street analysts who questioned the new market's drawing power.
The National Association of Securities Dealers, Nasdaq's parent company, sealed an agreement with Japanese Internet group Softbank Corp. to create a new electronic stock market in Japan that will mimic the Nasdaq's high-tech, high-growth focus.
NASD officials expect the new exchange to not only attract several current Nasdaq members, but also to entice a plethora of high-growth Japanese companies that are already public or mulling IPOs. The new market will use Nasdaq's screen-based approach to trading equities and will include the Internet as a key "conduit."
"We have a wide inventory of stocks to offer that market and we would expect a similar trend [of companies] to develop in Japan," said Andrew MacMillan, a NASD spokesman.
Analysts skeptical
But the plan drew a wary eye from analysts who pointed to the Japanese's stiff allegiance to their traditional market, the Tokyo Stock Exchange, as well as the NASD's largely unsuccessful attempt to launch a similar market in Europe called Easdaq.
"Tradition drives these international markets very, very hard," said Richard Cripps, chief market analyst with Legg Mason Inc. in Baltimore. "The concept is interesting, but inevitably, they will find it as difficult, if not more difficult than Europe."
MacMillan said the launch of Easdaq was hamstrung by the lack of demand among European investors to trade Nasdaq shares before the U.S. market opened. Accordingly, the exchange has thus far listed only 43 companies, including only a handful of American technology companies.
"The question now is, if you build it, will they come?" MacMillan acknowledged.
The advantage the Japanese venture holds, MacMillan said, is Japan's 10-hour time difference with the West Coast. Since there will be no trading overlap with the Nasdaq, even after the U.S. market extends its trading hours to 10 p.m., the new market will quickly establish it's own identity, he said.
Analysts, though, are taking a wait-and-see attitude.
"I don't know if it will be successful," said Thomas Mangle, portfolio manager of Wadell & Reed's international fund. "Japan is always a little different. We'll have to wait and see how they react to this."
Recruiting Japanese firms
Initially, MacMillan said he expects the fund will consist almost entirely of U.S. stocks currently listed on the Nasdaq exchange, but will actively look to recruit the country's more high-growth companies.
MacMillan said on average Japanese companies wait 23 years before taking their companies public, but NASD officials are hoping the prospect of greater access to capital might accelerate the process.
"It certainly offers a platform for Japanese companies to raise money," Mangle said. "Japan still lacks a lot of companies in the service or growth area, so this could prove a good vehicle for the creation of those companies."
It also expands the Nasdaq's ever-growing global reach. With markets in both Europe and Japan -- and NASD officials continuing to discuss joint listings with Hong Kong's Hang Seng index -- MacMillan noted the company is inching ever closer to being able to offer around-the-clock trading.
The Tokyo Stock Exchange, meanwhile, is moving forward with its planned alliance with Nasdaq's primary competitor, the New York Stock Exchange. Nasdaq is also being hit with increased competition from electronic trading networks.
Softbank provides information and distribution services to the digital information industry and owns stakes in more than 60 Internet-related companies, including a 51 percent holding in Yahoo! Japan.
|
|
|
|
|
|
Nasdaq
Softbank
|
Note: Pages will open in a new browser window
External sites are not endorsed by CNNmoney
|
|
|
|
 |
|
