breaks 5000. Japanese tech shares nosedive. What gives?

Dealers at Japanese securities firms were sticking close to home Friday as they shed former market darlings, including

Hikari Tsushin



. Shares in both firms, which are considered benchmark tech issues, plunged as combination of profit-taking before the fiscal year-end and nasty rumors tempted even the sturdiest to unload their holdings.

While blue-chip Old Economy stocks helped the

Nikkei 225

stock index close up 88.07 at 19,750.40, swooning New Economy shares brought down other indices. The


index, which is composed of all shares listed on the

Tokyo Stock Exchange's

first section, fell 10.47 to 1633.30. The


small-cap index shed 45.82, or 1.9%, to 117.04, while the Nikkei


shares slipped 45.82, or 1.9%, to 2422.67.

Internet play

Hikari Tsushin

, already down nearly 59% since Feb 15, dropped 31,000 yen, or 24.8%, to 94,000. Shares have been battered by hedge fund and domestic investor selling, the latter looking to book some quick cash before the close of fiscal 1999 on March 31. An unflattering article in the

Bungei Shunju

magazine also helped provoke the slide. The magazine highlighted the firm's alleged "aggressive" sales tactics, and suggested it was turning into another "empty" Internet firm.

Traders speculated the other "empty" Internet firm was


, although it was not featured in the magazine. Shares nonetheless tumbled 14,800, or 13.0%, to 99,200. Softbank has a stake in


through a U.S. unit.

"After reading the article, I felt like the market had chased prices (of the two firms) higher solely on hype and not on fundamentals," said one equity trader at a large Japanese trading house, who was one of the many who shed Hikari Tsushin today. "The problem is, after Softbank comes out with its next hit like

Yahoo! Japan

, we're all going to be buying them again, but maybe not as aggressively as before."



, an email and Web-hosting firm that saw shares rise over 400% on its first day of trading on the Nasdaq Wednesday, is facing a host of arbitrage plays in its debut on the TSE's new high-tech


market. Shares are ask-only at 53.6 million versus an IPO price of 13.2 million. The TSE stops trading of shares that aren't balanced.

Another firm roiled by rumors was


(SNE) - Get Report

, which saw shares fall 1800, or 6.4%, to 26,300. Talk started on Thursday with an article in

Fastest Gaming News

, which said Sony's recently debuted

PlayStation 2

game console had faulty memory cards. Although Sony is denying the problems, local reports say

Speed Racer

wannabes are complaining about technical glitches in the console's DVD drives when playing the popular

Ridge Racer V

driving game.



shed 49, or 3.5%, to 1354 after the firm slashed its net profit for fiscal 1999 to 10 billion yen versus its previous estimate of 35 billion yen.

On the upside,

Toyota Motor

said it would buy a 33.8% stake in truck manufacturer

Hino Motors

, giving the former veto-power over Hino's board. Toyota rose 220, or 4.8%, to 4820.

The greenback eased slightly against the yen to 106.28. The downside is limited by fears of another

Bank of Japan

intervention and expectations that Monday's release of fourth-quarter gross domestic product will be better than expected. While the economy is expected to contract, pushing Japan back into recession, it probably won't be as serious as the 1.4% decline previously forecast. Due to a slight upswing in private investment figures that were released Thursday, many economists revised upward their GDP figures today.

Hong Kong's

Hang Seng

index climbed 194.83, or 1.1%, to 17,831.86, thanks to a rally in

Hutchison Whampoa


, up HK$8.00, or 5.9%, to 144.50.