The Collapse of Hikari Tsushin

Joanie redux:

"A sharp eyed reader reminded me about the March 10, 2000 collapse of Hikari
Tsushin (#9435), a Japanese internet thingy that imploded under fraud allegations and took the Nikkei down along
for the ride. Not too long afterwards, the Western markets followed suit.

So why is this germane?

Because [Monday] night, Japanese authorities raided a listed firm called Livedoor (another high-profile Internet company), looking
for violations of securities regs. The Nikkei responded by having the largest fall in more than a year (-2.84%).

you can make your own judgment as to if this is a one-night stand or if it bodes for something more along the lines
of Hikari Tsushin. We note, too, that other names with the same biz model as Livedoor, i.e., rapid growth thru
splits and M and A, were given short shrift last night as well.

So there’s a hint, eh? Anyhow, just thought I’d
mention this because the situation is analogous . . .

This and the prior post on Japanese Internet companies being raided are examples of ow some unforeseen factor can be the spark that starts the fire . . .


UPDATE: January 19, 2005 6:45am

The NYT asks :

Is the Japanese establishment out to destroy an upstart who had the gall to try hostile takeovers and expand aggressively through acquisitions? Or is Takafumi Horie simply a 33-year-old crook who fooled investors with fake numbers?

A trader at work at the Tokyo Stock Exchange early Thursday. Though the market turned higher, analysts watched warily — fearful that the losses could resume, causing financial and even some economic damage.

Whatever the reality, a raid by prosecutors on the offices of the Livedoor Company in Tokyo set off something akin to panic among Japanese investors yesterday, sending share prices sharply lower and forcing the Tokyo Stock Exchange to close early.


Rocking the Boat in Japan
NYT, January 19, 2006

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What's been said:

Discussions found on the web:
  1. trendfellow commented on Jan 18

    one small company should not dent the overall optimism of Japanese equity.. it is bouncing back as we speak. +2% on Nikkei..

  2. rob commented on Jan 18

    I’m sure an accorn fell on a frog the week before the Nasdaq collapsed, is this a correlative event too?

  3. TonytheTiger commented on Jan 18

    I agree with Trendfellow, if you look at the big picture, this will give the market impetus for the next leg up.

  4. Fred commented on Jan 19

    There is also the roach theorem. If you see one roach you know there are a lot more. Damn roach! Damn roach! Damn roach!

  5. John Navin commented on Jan 19

    Here’s how it’ll happen here: news that a large publicly-traded seach engine has been cooperating with the government by handing over search records of American citizens without their permission or knowledge.

    News of this activity, previously suppressed, will generate a storm of indignation and protest…and boycotts.

    The stock drops like a rock. Since it had been the market’s leader for months and months, a Japanese-like meltdown ensues.

    I’m just guessing.

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