JIN-193 -- Firms May Look For New Home Away From Nasdaq Japan

J@pan Inc Magazine Presents:
T H E J @ P A N I N C N E W S L E T T E R
Commentary on the Week's Business and Technology News

Issue No. 193
Wednesday, August 21, 2002


++ Viewpoint: Firms May Look For New Home Away From Nasdaq Japan

++ Noteworthy News
- Chinese e-Commerce Site Alibaba to Enter Japan
- S&P Warns of Possible Downgrade of Japan's Sovereign Ratings
- Toyota Posts Largest Taxable Income for FY2001

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++ Viewpoint: Firms May Look For New Home Away From Nasdaq Japan

The opening of Nasdaq Japan as a section of Osaka Securities
Exchange (OSE) in June 2000 was supposed to boost the number of IPOs
by startup companies, as the regulations made it easier for them to go
public. But, after having accumulated a 5.3 billion yen loss, Nasdaq
US decided last week that it would pull out of Japan in October.

Tokyo-based Softbank and Nasdaq US each own 43 percent of the venture.
The market will continue under a new name, the Japan New Market,
regulated by the OSE, which has assured that the rules for listing and
trading will be unchanged.

Yet, the future of the market remains uncertain. About 100 companies
listed on Nasdaq Japan, including Starbucks, are left to decide
whether to remain on what's left of Nasdaq or to find a new home

Video rental chain GEO, for example, has already announced that it
will consider the option of leaving the market to be listed
elsewhere, while carefully watching how the new market will go,
according to the company's press release. For GEO, which already has
annual sales of over 60 billion yen, it may not be so hard to find a
new home, but what about others?

"Those who could go either Mothers or JASDAQ would do so. The market
is doomed to shrink, only to be left with small companies that are not
qualified for other [exchanges]," predicts Yasuaki Fujine, CEO of
independent research firm Analyst Net Japan.

Nasdaq Japan, JASDAQ and the Mothers section of the Tokyo Stock
Exchange (TSE) are heavily weighted with startup businesses, as their
qualifications for listing are lower than other sections of stock
exchanges. Of the three, Nasdaq Japan sets the lowest hurdles for

"I have always told (pre-IPO companies) to go for Mothers, instead of
Nasdaq Japan, as I didn't expect Nasdaq Japan to succeed," continues
Fujine. The costs to build and manage the system was too huge for both
Softbank and Nasdaq US to bear, especially when they were only
dealing with small cap companies, he explains.

Of the three markets, JASDAQ is in a different league as it is by
far the largest. It has over 900 companies listed, while the total
market capitalization of these companies has risen above 10 trillion
yen as of May. Nasdaq Japan currently has about 100 companies with a
total market capitalization of 1.5 trillion yen, Mothers has less than
1 trillion yen.
There have been some talks on merger plans either with JASDAQ or with
Mothers, but neither has shown any interest in the debt-ridden market.

All these talks aside, however, some firms are planning on their IPOs
at Nasdaq Japan as scheduled. Osaka-based net venture BB Net is one.
Net Village, a Tokyo-based venture, is another. They plan to go ahead
with in September as scheduled.

Even if the market withers away, the short history of Nasdaq Japan
has made an important contribution to Japan, or at least that's what
Softbank President Masayoshi Son claims. It used to take an average of
23 years before a Japanese company went public and Nasdaq Japan,
although failed, has contributed in shortening that time period, Son
reportedly told the Nikkei Shimbun Newspaper.

-- Sumie Kawakami

Nasdaq Japan Press Release (August 16, 2002)

GEO press release (in Japanese)(August 20, 2002)

AP "Nasdaq pulls out of Japanese venture" (August 16, 2002)

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** Chinese e-Commerce Giant Alibaba.com to Enter Japan

In Brief: According to the Japanese press, Alibaba.com, a Chinese
e-commerce giant, will enter the Japanese market this fall. The
company boasts of being the top destination for buyers and sellers to
find trade opportunities and promote their businesses online, with
over over 1 million registered members worldwide.

The company has agreed an comprehensive package deal with Japanese
firm NNA, in which NNA will be in charge of creating and managing
Japanese contents.

Alibaba.com's Board of Advisors includes Peter Sutherland, founding
Director-General of the World Trade Organization and Masayoshi Son,
President and CEO of SOFTBANK Corp.


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**S&P Warns of Possible Downgrade of Japan's Sovereign Ratings

In Brief: Standard & Poor's, the credit rating agency, on Monday
warned that further delays to Japan's structural reform programme
could result in an additional downgrade to its sovereign credit

The report said that any further dilution of the reform agenda will
undermine the prospects for an economic recovery, further reduce the
government's future fiscal flexibility and lead to an increase in
Japan's already massive public sector debt.

In April, S&P downgraded Japanese government bonds by a notch to AA-;
the lowest among the Group of Seven Industrialized nations.

S&P Press Release (in Japanese) (August 19, 2002)


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** Toyota Posts Largest Taxable Income for FY2001

In Brief: Toyota Posts Largest Taxable Income for FY2001

Teikoku Databank, a private research firm specializing in corporate
finance, released rankings of corporate earnings based on fiscal 2001
(April-March) taxable corporate income Tuesday.

According to the rankings, Toyota posted the largest taxable income
for the third straight year at 937.1 billion yen, up 38 percent from a
year earlier. NTT DoCoMo ranked second, advancing from fourth, with
taxable income of 410 billion yen, while its competitor KDDI Corp with
its au mobile phone arm, advanced from 38th spot to 24th. KDDI posted
income of 110.1 billion. Tokyo Electric Power Co (TEPCO) came in
third, although its taxable income declined by 1.4 percent from the
previous year.

Source: Asia Pulse (August 21, 2002)

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Written and edited by J@pan Inc staff (editors@japaninc.com)


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