"Livedoor shock" May Already be Wearing Off -- Japanese Stocks Rebound Thursday as Tokyo Stock Exchange is Under Fire (EWJ, ITF, VPL, JEQ, JOF, NMR, MC)
After three straight trading days of mass sell offs the Nikkei 225 (tracking ETF: EWJ) and broader TOPIX Index (sub-index tracking ETF: ITF) both rebounded, 2.3% and 2.9% respectively. Traders and investors seem to be getting over the media dubbed "Livedoor shock" sooner than I expected. Honestly I was kind of hoping shares would go lower bringing more buying opportunities. At any rate, like-minded bargain hunters were busy buying today. There had been concern that a large number of sell orders unsettled from Wednesday's early close would pull stocks down in early morning trading. That did not happen and perhaps for that reason iShares MSCI Japan Index (EWJ) was up .16 or 1.21% in after-hours trading and will be up sharply in pre-market trading to reflect the rebound in Tokyo.
The Tokyo Stock Exchange however remains under fire for its inability to handle the large increase in orders following the raid and probe of livedoor Co. (Tokyo Stock Exchange Mothers Index ticker: 4753) and whipping boy president Takafumi Horie ("Horiemon"). On Wednesday the exchange's president Taizo Nishimuro (former chairman of Toshiba Corp.) created an uproar and a rush of even more sell orders when in a press conference he warned the exchange would be forced to close early (which it did, ending twenty-minutes earlier than its usual 3:00pm close) due to an inability to process the upsurge in stock orders. In a later press conference Nishimuro asked traders and investors to consolidate orders and to be patient as the exchange works towards expanding its capacity. The first step at increasing order handling capacity is expected to be introduced by the end of this month with incremental targets in place throughout the year. He also declared a thirty-minute later start to afternoon trading effectively cutting the trading day short by the same amount of time.
Livedoor meanwhile has lost over US$2 billion in market-cap this week during its widely publicized investigation. Most of the time its shares have been halted from trading and adjusted to the low-end of its daily trading limit based on an overwhelming number of sell orders against slim to no buy orders. There is growing speculation that livedoor's shares will be delisted.
Two ADRs to watch on Thursday are Nomura Holdings (NMR) and Matsushita Electric Industrial (MC). The former's shares traded in Tokyo enjoyed a 4.66% gain while the latter's lost 4.97%.
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