Japan's Nasdaq Debuts

The first overseas version of the technology-oriented Nasdaq Stock Market made a high-profile debut Monday, getting a mixed reception from investors who bid on eight companies including a software developer, a video game wholesaler and a drugstore chain.

Hopes are running high that Nasdaq Japan will encourage venture businesses -- especially high-tech start-ups -- in this risk-adverse culture where entrepreneurs often struggle to find financial backing.

The market also expands options for investors in Japan, who soon will be able to trade electronically 24 hours a day and even deal in stocks listed on the Nasdaq Japan's counterparts in the United States and Europe.

"Our view is that Nasdaq Japan probably will emerge as the leading new-listing (and) growth-stock market in Japan," said Jonathan Dobson, who manages Jardine Fleming's $400 million Fledgling Japan Smaller Companies Fund in Tokyo.

"It is encouraging to us to have what will eventually be trading conditions similar to those in the U.S," he said.

Nasdaq Japan began operations as part of the Osaka Stock Exchange, the largest Japanese exchange outside Tokyo. It plans to introduce its own trading system next year linked to and modeled after the original Nasdaq market.

But living up to the reputation of its U.S. namesake may not be easy for the joint venture between Nasdaq's U.S. parent and the Japanese investment company Softbank Corp.

The exchange has opened for business at a time that investors in Japan are losing their once-insatiable appetite for technology shares.

Put off by the dizzying declines of dot-coms on Wall Street, investors have been reshuffling their portfolios to include more low-priced, low-tech issues.

"It's not a very good investment climate," said Shoji Hirakawa, strategist at Kokusai Securities Co., adding that investors are now "focused on the risks" of technology stocks.

Nasdaq Japan's organizers held a ceremony in Osaka before the start of trading and a news conference in Tokyo afterward, where photographers jostled for a shot of U.S. Nasdaq Chairman Frank Zarb and Softbank's billionaire founder, Masayoshi Son.

Trading was more subdued, however.

Of the eight stocks that started trading Monday on Nasdaq Japan, four rose, three fell and one finished unchanged.

Three of the four companies that were listing their shares for the first time on any market attracted most of the buying.

Software developer Digital Design Co. rose 33 percent above its initial asking price of 1.5 million yen ($14,132), and drugstore chain operator Sugi Pharmacy Co. climbed 28 percent above its IPO price of 7,000 yen ($65.95).

Investors were less enthusiastic about the four companies whose stocks had previously traded on other Japanese stock markets. Digicube Co., which supplies video game software to convenience stores, slipped 1.8 percent to 2.8 million yen ($23,30).

A global pullback by technology issues dealt a blow to another Japanese bourse for venture businesses that started trading amid similar fanfare last December.

Seven of the 10 companies listed on that market are now trading below their debut prices. The two markets offer start-ups less stringent listing requirements than those imposed by established exchanges.

Nasdaq Japan lists more than 100 companies over the next year, with an average of about 10 companies each month, said spokesman Koji Aoki.

Many of those are likely to be affiliated with Softbank, which holds a 50 percent stake in the market's operator, Nasdaq Japan Planning Co.

Softbank has become one of the world's most prolific investors in the Internet, taking stakes in more than 200 dot-com companies including in the popular portal Yahoo Inc.

Some analysts worry that Softbank's close relationship with Nasdaq Japan could mean an identity crisis for the new market.

There are concerns that the online investor could misuse its influence to get its own affiliates listed ahead of other companies.

Nasdaq's Zarb scoffed when a reporter suggested that scenario at the news conference following the market's close.

"The notion that for some strange reason this relationship (with Softbank) has some sort of threat I find to be completely without merit," he said.

Nasdaq and Softbank agreed last June to form Nasdaq Japan. In November the U.S. bourse announced plans for a Nasdaq Europe, which is scheduled to start trading in the fourth quarter of this year.

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