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Tokyo Stock Exchange Forced into Early Closing

Wed, 01/18/2006 - 2:19am
Len Vermillion

The Tokyo Stock Exchange was forced to close early as Japan's main stock market index tumbled for a second consecutive day in the wake of a widening criminal investigation of the Internet startup Livedoor, the Associated Press reported. The Livedoor investigation has led to a sell-off in technology shares forcing the exchange to halt operations 20 minutes early due to heavy trading volume.

The surge in transactions led the benchmark for the Tokyo Stock Exchange to plunged 2.9 percent on Wednesday. It was the first time a session has ended early because the exchange could not handle trading volume.

The Nikkei 225 index dropped 464.77 points to close at 15,341.18 points. It is the largest one-day drop since May 10, 2004.

On Tuesday, Japanese newspaper reports indicated that the Livedoor investigation began on Monday and was in the process of expanding. Since then the index has fallen nearly 6 percent the last two days.

"Individual and foreign investors are selling in a panic," Satoru Otsuka, senior economist at Mizuho Research Institute in Tokyo told the Associated Press. "The problem is that we have no idea how the Livedoor problem will unfold."

The Japanese newspaper reports said that prosecutors marched into the Tokyo headquarters of Livedoor Monday evening on suspicion of violation of securities laws by giving false information. Led by Takafumi Horie, a business celebrity in Japan, Livedoor is an Internet services company specializing in consulting, telecommunications, mobile sites and software development. According to AP, it also has bought up chunks of other companies and managed to raise money by offering more of its own stock.

A report in the national daily Yomiuri Shimbun said that Livedoor is suspected of concealing a 1 billion yen  deficit for the full-year results ending September 2004. Horie denies any wrongdoing, and authorities did not comment on the Yomiuri report.

Internet-related stocks, such as Yahoo! Japan, got hit in the market's plunge. Electronics firms such as Canon Inc., Toshiba Corp. and Sony Corp also fell, according to AP.

The Tokyo exchange plans to delay the start of afternoon trading 30 minutes on Thursday, in anticipation of increased trading volume, Kyodo News Agency reported. 

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