Securities Industry Japan

A Japan Finance Ministry advisory panel agreed Tuesday to tighten up the country's laws against insider trading and make it a criminal offense. Kazumoto Suzuki, director of the ministry's stock dealing inspection division, said agreement had been reached on recommendations for laws to stop stock trading based on non-public information.

Nasdaq Japan, the Japanese version of the dealer-run Nasdaq Stock Market in the U.S., will begin trading by mid-2000, six months earlier than planned, the U.S. National Assn. of Securities Dealers and Japan's Softbank Corp. said. The NASD-Softbank alliance signed an agreement with the Osaka Securities Exchange under which Japan's second-largest stock exchange will provide surveillance, trade settlement and company-listing services for Nasdaq Japan.

As a deepening securities scandal continues to rock Japan, investigators are unearthing details of a stock scam that offers a rare glimpse of the shady back alleys behind Japan's stock exchanges--how Japan's top brokerage houses appear to play the Tokyo stock market as if they were running a private casino with the odds heavily favoring the house.

TOKYO Japanese consumers, long dismissed as an illogical breed that eschews risk and enjoys paying higher prices, are showing they will act as rationally as their counterparts anywhere else if given half a chance. On Oct. 1, Japan ended its high fixed commissions on retail stock trading under its "Big Bang" deregulation policy--replicating a move the United States made in 1975. Overnight, commissions dropped by as much as 90%.

In an eerie echo of last summer's financial scandals, the president of Daiwa Securities Co., Japan's second-largest brokerage, resigned Wednesday after admitting responsibility for shady deals that caused the company's clients hundreds of millions of dollars in losses. Daiwa President Masahiro Dozen announced his resignation at a press conference, saying he "apologizes" for a series of deals blamed for customer losses. Dozen's resignation came the same day as Tokyu Department Store Co.

Maybe they'll call it the Trademan. Sony Corp., the company that brought the world the Walkman stereo, said Tuesday that it is considering a foray into the online stock brokerage business. The giant consumer electronics maker says it's in talks with U.S. broker Charles Schwab & Co. and others to enter the online brokerage business in Japan. "We're currently considering how to enter the business the Sony way," said Masayoshi Morimoto, corporate senior vice president at Sony.

Japan's finance minister said Tuesday that his ministry is expanding its inquiry of Nomura Securities Co., which allegedly recommended a railway company's stock to customers after a client with underworld connections had made large purchases of it. Also Tuesday, a Socialist lawmaker said a Finance Ministry document he obtained shows that Nomura, the world's largest brokerage, illegally drove up the price of Tokyu Corp. shares, earning the underworld figure millions of dollars.

It was sheer boredom that drove Hisako Arai into the stock market. Her children were grown. Her husband was busy. And though she had a pharmacist's degree, he wouldn't let her work. The 61-year-old grandmother had fun riding the raging bull market of the 1980s. But as the market shed 56% of its value between December, 1989, and April, 1992, Arai managed to lose more than $4 million of her husband's money without his knowledge. Now he's threatening divorce. Creditors are circling.

Japanese stock prices, which on Monday took their biggest plunge in more than two years, are expected to continue their volatility in the coming days as long as political turmoil threatens to delay economic stimulus. The Nikkei index fell 954 points, or 4.9%, to close at 18,353 Monday. This was the steepest fall since Aug. 19, 1991, when a 1,358-point drop was touched off by the attempted coup in Russia.

Yasuo Hamanaka, the veteran Sumitomo copper trader at the heart of a current financial scandal, ended eight weeks of hiding Sunday. He said that he is doing well and that he has been living quietly in Tokyo. In a brief interview with Reuters here, Hamanaka said that he will comment on the scandal "sometime in the future." He said he has had no contact with Sumitomo Corp., his former employer, since his firing June 14, a day after the company announced that it had lost $1.

Stocks in Tokyo opened higher today on news that Japanese business confidence surged to a 21-month high in September in a strong signal that companies are benefiting from the economy's recovery from last year's recession. But companies remain reluctant to translate that optimism into increased investment, symptomatic of the uneven recovery. The Bank of Japan's quarterly tankan index of large manufacturers' confidence rose to minus 22 from minus 37 in June.

The Bank of Japan put its foot down on Tuesday. But did it crush the country's hot stock market by doing so? Bank of Japan board members unexpectedly voted to keep monetary policy unchanged, resisting pressure from politicians to expand the nation's money supply to help slow the surging yen. The decision by Gov. Masaru Hayami and his fellow central bankers triggered another jump in a yen that some analysts say is already threatening the recovery of the world's second-largest economy.

Japan's Nikkei stock average remains 54% from its 1989 peak, despite its recent rally, but shares of Sony Corp. are breaking records daily. The electronics giant's American depositary receipts, which track its Japanese stock, have doubled this year. The shares picked up new steam this week on excitement for Sony's upcoming successor to the PlayStation video game console, which will play music CDs and movie DVDs as well as existing software. Quarterly closes and latest on the NYSE: Tuesday: $148.

Japanese stocks have been on a scorching run this year, but it's easy to view the gains with some skepticism. After all, the Japanese market has shown signs of recovering throughout its now decade-long malaise--rallying in 1993, 1994, 1995 and 1997--only to fizzle each time. What's more, the yen has strengthened considerably relative to the dollar over the last two weeks, threatening the health of Japan's critical export sector. That has been a major factor in the Nikkei-225 stock index's 5.

Online service provider Internet Initiative Japan reportedly plans to go public on the U.S. market, in what would be the first case of a Japanese firm listing shares abroad before doing so at home. The company hopes to raise about $150 million in its share offering, which may come as early as August on Nasdaq, the Nihon Keizai Shimbun, Japan's leading business newspaper, reported Tuesday evening.

The Japanese stock market is in a steep climb, and there might actually be good reason for it. Despite all the country's woes and skepticism about its claims of progress, analysts say the market is responding to an accumulation of hopeful economic indicators, signs of true corporate restructuring and indications that Japan may be collecting dividends from Asia's early economic recovery. And surging stock prices themselves could further fuel the process by bolstering Japan's beleaguered banks.

Online service provider Internet Initiative Japan reportedly plans to go public on the U.S. market in what would be the first case of a Japanese firm listing shares abroad before doing so at home. The company hopes to raise about $150 million in its share offering, which may come as early as August on Nasdaq, the Nihon Keizai Shimbun, Japan's leading business daily, reported Tuesday evening.

Nasdaq Japan, the Japanese version of the dealer-run Nasdaq Stock Market in the U.S., will begin trading by mid-2000, six months earlier than planned, the U.S. National Assn. of Securities Dealers and Japan's Softbank Corp. said. The NASD-Softbank alliance signed an agreement with the Osaka Securities Exchange under which Japan's second-largest stock exchange will provide surveillance, trade settlement and company-listing services for Nasdaq Japan.

As expected, the Nasdaq Stock Market on Tuesday announced plans to create a Japanese version of the electronic Nasdaq trading system in a joint venture with Japanese Internet giant Softbank. New Japanese stocks that would list on the new market also would be listed on Nasdaq, said Frank Zarb, chairman of the National Assn. of Securities Dealers, Nasdaq's parent.