Selling stampede shuts down Tokyo stock (Reuters) Updated: 2006-01-18 17:29
A stampede of sell orders forced the shut-down of the world's second-biggest
stock exchange on Wednesday as investors fled the Tokyo market, spooked by
fall-out from an investigation into Internet company Livedoor.
A man looks at a
stock quotation board showing the Nikkei share average in Tokyo January
17, 2006. [Reuters] |
The Tokyo Stock Exchange, where shares were down more than 4 percent at one
point, suspended trading 20 minutes before the normal closing time after the
number of trades threatened to exceed its computer system's capacity of 4.5
million per day.
It the first time that the exchange was forced to halt trading as a result of
capacity constraints since it opened its doors in its current incarnation in
1949.
Livedoor, a favorite of small investors, was raided by prosecutors on Monday.
The firm is suspected of fudging financial reports and spreading false
information to boost its share price.
News of the raid extended a sell-off that has wiped out more than $300
billion in shareholder value -- about equal to the gross domestic product of
Sweden -- in just three days.
"The current situation is totally unexpected. My guess is that Livedoor's
investigation news spooked individual investors and prompted them to sell
broad-based stocks," Tokyo Stock Exchange President Taizo Nishimuro told a news
conference.
The exchange has been hit by a series of recent system problems, including a
glitch that halted trading for almost a full day late last year.
Wednesday's shut-down dealt another blow to the image of the exchange, which
has plans to list its own shares.
"It is an embarrassment for this to happen in the world's second-largest
economy and that's the emotional aspect of the debate," said Hideo Ueki, chief
investment officer at UBS Global Asset Management Japan.
"But this problem will likely add to the growing negative sentiment in the
market. I'm pretty sure the NYSE has only had to shut down for snow or a
black-out."
Nishimuro said that the bourse, which had already planned to increase
capacity to 5 million shares on January 30, would consider shortening trading
hours on Thursday and beyond if necessary.
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