The Nasdaq Stock Market Inc., the world's largest electronic stock market, said Wednesday it will write off the $20.1 million it invested in and loaned to Nasdaq Japan Inc.
"Due to prolonged difficulties in the Japanese economic environment, we concluded that our investment in Nasdaq Japan will not return value in the foreseeable future," Nasdaq Chairman and CEO Hardwick Simmons said.
"We believe that the impairment we are taking captures Nasdaq's full exposure to the investment," he said.
Nasdaq is one of the two biggest shareholders in Nasdaq Japan, with a 42.9 percent stake, the other being Softbank Corp.
The write-down will include a $15.2 million pretax impairment of its investment in Nasdaq Japan, Nasdaq said, noting that the impairment represents a complete write-down of the investment, outstanding and unfunded loans, other receivables and foreign-exchange translation losses.
But this will not affect its equity stake in Nasdaq Japan, it said, adding, "Nasdaq is recognizing this impairment as a result of the depressed level of market activity in Japan, combined with the suspension of the hybrid trading system based on the inability to gain exchange approval of market rules and industry participation.
"These conditions have led management to conclude that Nasdaq Japan will not be profitable in the foreseeable future."
Nasdaq Japan operates the Nasdaq Japan market, an electronic market for startups that is managed by the Osaka Securities Exchange.