During the asset-inflated bubble economy of the late 1980s, when the Tokyo stock market was enjoying rocketing prices, brisk transactions and a high reputation, securities authorities did not have to worry about how to invite foreign companies to list. But times have changed.
Amid growing fears that Japan’s position among the world’s financial markets is declining, the Tokyo Stock Exchange is struggling to lure potential firms from developing economies. It is part of a larger effort to make the market’s presence attractive both for foreign countries and domestic investors.
The listing on the TSE Feb. 5 of Henderson Land Development Co., a Hong Kong real estate developer, may be something of another boon for exchange officials, who are trying to rebuild the crumbling foundation of the Tokyo market as an international financial center. Henderson is the first Hong Kong firm and the second non-Japanese Asian company to be listed on the TSE, after the listing of Malaysia-based YTL Corp. in February 1996. Henderson stock fetched an initial price of 1,140 yen and closed at the same price Feb. 5, compared with its closing price of 72.75 Hong Kong dollars, or about 1,150 yen, on the Hong Kong market the previous day.
TSE officials say they hope more Asian firms looking to diversify their sources of financing will come to Tokyo to list. “Developing nations want to eventually foster their financial markets so that their companies can finance themselves sufficiently at home. But in the meantime, they need help to cope with rapidly expanding demand for funds,” an official at the TSE’s listing examination office said. “At the same time, we at the TSE are in need of newcomers in the market to attract investors, especially Japanese individuals … whose outstanding gross financial assets are said to amount to 1.2 quadrillion yen,” the official said.
The number of foreign firms listed on the TSE dropped from 127 in 1990 to 67 as of Feb. 5, with one more firm scheduled to delist in May. Among the companies that have delisted in the past two years are Ford Motor Co., General Electric Co. and The Walt Disney Co.
Most of the delisting firms say they see no reason to stay amid the low transaction volume. The daily average transaction volume of the foreign stock section shrank to 157,000 shares in 1995 — less than one-tenth of its 2.756-million-share peak in 1987.