The Coming Week in Asia: IPO a Ray of Hope on Bleak Tokyo Stock Scene

TOKYO -- If you think the near 5% slide the Nasdaq Composite Index took over the past three months is irritating, try not to look at charts of the major Japanese indices.

The Nikkei 225 index is down 14.1% over the same period, while the broad Topix index, akin to America's S&P 500, has shed 13.9%. Retail investors are beating down Japanese technology shares to the point it looks as if they're exacting revenge.

What's behind the financial payback? For one thing, retail investors were so blinded by the tech hoopla that brokers feverishly pitched at the beginning of the year, they didn't think twice when plunking down for stock at the top of the market. Many of them were punting on margin, posting just part of the cost and borrowing the rest from their brokers.

Now those loans are being called. And investors are raising the balance by whacking even blue-chip companies, like chipmaker Advantest. The former favorite is already down about 30% since the beginning of the year.

Foreign investors, the market's former white knights, are nowhere to be found. Except, of course, behind short positions. The latest statistics show foreigners sold $3 billion worth of Japanese securities in July, making them net sellers over the past four months. All kinds of reasons have been cited for the lack of foreign participation: political uncertainty, covering for losses made in U.S. equities and fear of more corporate failures. Some are even citing the overhaul of German tax laws, which will make it less costly to sell long-held profitable investments, as an inducement to move money to Europe.

"European investors are definitely leaving Tokyo and will soon start buying back German shares now that the government relaxed tax penalties," laments Masaaki Higashida, deputy general manager at Nomura Securities. "That's going to boost liquidity there, but not here."

All, however, is not bleak. Despite a bout of canceled IPOs , NEC Soft, the software arm of NEC (NIPNY), pushed ahead with an offering in late July and scored. Shares are up 30.4% from the offering price. Monex, Japan's leading online broker, saw its price roar 51.8% on Friday, even though shares were offered at a pricey 45,000 yen ($415) a pop.

The next big IPO comes on Thursday when Aoi Electronics will sell 1.85 million shares to be listed on the Tokyo Stock Exchange's second section at 4,300 yen. Traders are hoping a good showing from the integrated circuit maker will boost sentiment. It helps that Kanagawa Prefecture-based Aoi has the numbers to back up the excitement. In fiscal 2000 (ending May 31, 2001) sales are expected to jump 16% to 32.8 billion yen, while pretax profits are expected to soar 47% to 3.7 billion yen.

Aoi is choosing a notoriously quiet portion of the calendar to come to market. Next week, Tokyo's trading floors will thin out as traders head to their homelands for the obon holiday, during which the Japanese pay respect to their ancestors. Some traders, in an effort to avoid the traffic and train congestion that mars the otherwise traditional quietude, have already started heading home.

Aoi will likely learn that timing is everything.

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