FINANCE-JAPAN: Still Bullish Over the Sagging Tokyo Bourse (1) An Inter Press Service Feature

By Suvendrini Kakuchi Reprint | | Print |

Suvendrini Kakuchi

TOKYO, Dec 9 1994 (IPS) - The Tokyo Stock Exchange (TSE) has been suffering a lackluster performance in the past few years, but stock analysts remain unusually upbeat over the erstwhile favourite of companies across the globe.

Indeed, TSE diehards say if Japanese authorities take the right steps and allow greater accessibility, it can be in the limelight once more.

“I admit the sparkle trading in Tokyo once held has dimmed substantially. But that doesn’t mean our confidence has, too,” says Mineko Sasaki Smith, a senior analyst at Morgan Stanley Japan.

She agrees with other stock analysts who cite the sheer enormity of the capitalisation of the Tokyo market as its biggest advantage.

Market watchers point out that on Dec. 5, 1989, at the peak of Japan’s financial boom, the trading volume was about 1.37 billion shares. Average daily trade for 1989 was two million shares. Says Smith: “I cannot see Singapore or Hong Kong trading that high despite the fact that both are dynamic markets.”

More than 2,000 Japanese companies are listed on the TSE. But the number of foreign firms on it have fallen from a high of 125 in 1991 to today’s 97.

Experts insist the reason for withdrawal is more the high costs of being a TSE member — one million dollars per year — rather than the sharp reduction in profits. But a broker admits, “With the turnover so low right now it is difficult to make ends meet.”

He adds, though: “It’s not that simple to turn one’s back on the TSE.”

These days, the battered but not beaten TSE has set its eyes on a new goal: attracting South-east Asian companies that are recording high performances as a result of the double digit growth rate of their economies.

TSE President Mitsuhide Yamaguchi will also visit China next spring to put the finishing touches to a bilateral agreement that will allow Chinese firms to be listed in the TSE. Officials say about 200 Chinese companies already meet TSE requirements.

Yamaguchi told reporters recently that guidelines will be eased for overseas firms seeking to float their shares in Tokyo. Experts have also taken notice that some of the steps to be introduced by next year seem to especially geared toward attracting the Asian customer.