Bloomberg News

Tokyo, Osaka Bourses Lure Foreign Investors as Trading Dwindles

December 12, 2011

Dec. 12 (Bloomberg) -- Japan’s top two stock exchanges are starting campaigns to lure overseas investors after agreeing last month to a merger amid falling trading volumes.

Tokyo Stock Exchange Group Inc. is starting an English- language magazine, called “Evolving Japan,” targeting foreign investors, said bourse spokesman Kazuhiko Yoshimatsu. Osaka Securities Exchange Co. will hold its first overseas investor relations event this week to promote start-up companies listed on its Jasdaq exchange, including auction website Rakuten Inc., according to Yumi Ito, a manager at the bourse’s corporate services development group.

The effort to interest foreign investors, who account for about two-thirds of the turnover on Japanese exchanges, comes as Europe’s debt crisis deepens a four-year slump in trading volumes. It also comes amid increasing competition from China, which in 2008 surpassed Japan as the world’s second-largest equity market.

“We need to be more aggressive about getting information to foreign investors, who are the main players in the market,” said Tokyo Stock Exchange’s Yoshimatsu. “We will continue to strengthen our efforts.”

The two bourses said on Nov. 22 they have reached a basic agreement to merge by January 2013. A combination would give the 133-year-old Tokyo venue, home to Sony Corp. and Toyota Motor Corp., access to Osaka’s derivatives trading system, while helping cut costs.

‘Evolving Japan’

“Evolving Japan” will be posted on the Tokyo Stock Exchange’s website as early as today and will be distributed through overseas brokers, Yoshimatsu said. The magazine’s first issue features articles by Japan’s Minister of National Strategy Motohisa Furukawa and Tadashi Yanai, chief executive officer of Fast Retailing Co., he said.

Executives from Rakuten, slot-machine developer Fields Corp. and seven other companies listed on the Jasdaq exchange will give presentations at an event today and tomorrow in London hosted by the Osaka bourse and Daiwa Securities Capital Markets Co., Ito said. Jasdaq, Japan’s biggest market for start-ups, is owned by the Osaka exchange.

“The Jasdaq isn’t well-known among foreign investors,” Ito said. “We want a wide range of investors, not just individual investors to know that it’s a market with high growth companies like the Nasdaq.”

Turnover on the first section of the Tokyo Stock Exchange has fallen by more than half since peaking in 2007. The value of trades on the first section of the Tokyo Stock Exchange has averaged 1.3 trillion yen this year, compared with 2.8 trillion yen in 2007.

Foreign investors accounted for about 65 percent of turnover on Japan’s bourses in October, according to the Tokyo Stock exchange. European investors made up 64 percent of those trades by value, exchange data shows. North Americans accounted for 24 percent of the number.

--Editors: Jason Clenfield, Nick Gentle.

To contact the reporters on this story: Toshiro Hasegawa in Tokyo at thasegawa6@bloomberg.net; Yoshiaki Nohara in Tokyo at ynohara1@bloomberg.net

To contact the editor responsible for this story: Nick Gentle at ngentle2@bloomberg.net


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