News that Nasdaq Japan is almost certain to abandon the market, following cumulative losses of Yen 5.3 billion since it started trading in June 2000, has sparked concern about the liquidity of stocks listed on the market.
The plan is that Nasdaq Japan Inc. and the Osaka Stock Exchange (OSE)will wind up their partnership on October 15 2002, with trading of Nasdaq Japan stocks moving to the tentatively named Japan New Market. The Nasdaq brand will survive in Japan at least until Nasdaq Japan has exhausted all possibilities of survival through, for example, consolidation with other stock markets for fledgling companies), but most observers sense there is a strong likelihood of withdrawal.
“Many of the listing companies were attracted mainly by the powerful and global brand of “Nasdaq” and therefore, a growing number of companies express their worries about the impact hereafter,” says a Bank of Tokyo Mitsubishi spokesman. “Investment companies fear that decline of the trading volume triggered by the market turmoil might require more time to unwind their positions, leading to deterioration of investment performance of their funds. The OSE already set the policy that it would run the market and continue to trade the currently listed 98 issues even after the name of Nasdaq disappears. However, officials of some Nasdaq-listed companies have started to worry about the impact of the loss of the name of Nasdaq.”
As BoTM warns, shifting stocks to other platforms may not be easy. A company may fail to meet the listing requirements. The cost and inconvenience of securing a list will be high.