JAPAN: Selling stampede shuts down Tokyo stock market.

Record ID: 238925

  • Title: JAPAN: Selling stampede shuts down Tokyo stock market.
  • Date: 18th January 2006
  • Summary: (ASIA) SINGAPORE (JANUARY 18, 2006) (REUTERS) (SOUNDBITE)(English) JACK REERINK, REUTERS EDITOR-IN-CHARGE OF ASIAN EQUITIES SAYING: "The exchange has had some high profile trading glitches in recent months caused by these swelling volumes of trade. The need to upgrade its trading system to accommodate its trade is more dire than ever. On the plus side, trading was order
  • Embargoed: 2nd February 2006 12:00
  • Keywords:
  • Location: Japan
  • Country: Japan
  • Topics: Finance
  • Reuters ID: LVACADT1OY5H0DN8XTBKRHM92V3A
  • Story Text: A stampede of sell orders forced the shut-down of the world's second-biggest bourse on Wednesday (January 18) as investors fled the Tokyo stock market, spooked by fallout from an investigation into Internet company Livedoor Co.
    The Tokyo Stock Exchange suspended trading at 0540 GMT (2.40 p.m.), 20 minutes before the normal closing time, after the number of transactions threatened to exceed its computer system's capacity of 4.5 million trades per day.
    The exchange has been hit by a series of system problems in recent months, including a glitch that halted trading for almost a full day late last year.
    "It is clear that the unexpected raids by prosecutors at Livedoor and its related offices were the cause for this (turmoil)." said Tokyo Stock Exchange President Taizo Nishimuro. "We are seeing an extremely unusual level of increase in the number of sell orders."
    Nishimuro also told a news conference earlier that the bourse would also consider shortening trading hours on Thursday (January 19) and beyond if necessary.
    The number of transactions had reached about 4 million by 0525 GMT (2:25 p.m.).
    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 before it clawed back to finish the shortened session down 2.94 percent at 15,341.18.
    That was still the Nikkei's 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.
    The three-day sell-off has wiped out more than 300 billion U.S. dollars in shareholder value -- equal to about the gross domestic product of Sweden.
    Government officials sought to calm nervous investors.
    "It seems likely that the ongoing investigation against Livedoor's subsidiaries led share prices to fall. But even considering the Livedoor factor, I think they are falling too much, too fast," Chief Cabinet Secretary Shinzo Abe told reporters, adding that the fall did not reflect Japan's economic fundamentals.
    The share-price tumble also hit the yen, which fell to a day's low of
    88 yen to the dollar, before recovering to around 115.60.
    Investigators from the Tokyo District Prosecutors' office and the Securities and Exchange Surveillance Commission raided the Tokyo headquarters of Livedoor late on Monday (January 16) on suspicion that the company had spread false information to investors.
    Newspaper reports on Wednesday said the company was also suspected of tampering with its financial reports.
    The investigation has scared off individual investors, who were a major factor in the Nikkei's 40 percent rise last year. Only last Friday (January 13), the Nikkei hit a five-year closing high.
    "The exchange has had some high profile trading glitches in recent months caused by these swelling volumes of trade. The need to upgrade its trading system to accommodate its trade is more dire than ever. On the plus side, trading was orderly so there is not a real panic, there is no need for a panic. In terms of the market movie itself, the market has done tremendously well. I t gained more than 40 percent last year alone. So, in this case, it may have been a case of investors taking money some off the table," said Jack Reerink, Reuters Editor-in Charge of Asian Equities.
  • Copyright Holder: REUTERS
  • Copyright Notice: (c) Copyright Thomson Reuters 2014. Open For Restrictions - http://about.reuters.com/fulllegal.asp
  • Usage Terms/Restrictions: None
Register