Tokyo forced to shut early

THE Tokyo Stock Exchange halted trading yesterday for just the second time in its 56-year history after a surge in orders overloaded computer systems.

Trading on the world’s second-largest exchange stopped 20 minutes early.

From today, the bourse will shorten its afternoon session by 30 minutes by starting at 1pm local time, rather than the usual 12:30pm.

A plunge yesterday brought its two-day loss to nearly 6% amid investor jitters about a widening criminal investigation of internet start-up Livedoor.

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

The reports clearly spooked investors, some of whom may have simply been looking for an excuse to sell after the market’s 40% gain last year.

The decline could also be attributed to investor disappointment over earnings results yesterday from American chipmaker Intel and web giant Yahoo, which were lower than analysts’ expectations.

The so-called “Livedoor shock,” as the Japanese media has dubbed the affair, started on Monday evening when Tokyo prosecutors raided the company’s offices to investigate allegations the company had violated securities laws by giving false information.

Reports yesterday said the probe had expanded, with the Yomiuri newspaper reporting that the internet company is suspected of concealing a 1 billion yen (€7 million) loss for the full-year results ending September 2004.

Livedoor’s 33-year-old chief executive, Takafumi Horie, denies any wrongdoing. Favouring jeans and T-shirts over business suits, Mr Horie frequently appears on TV and is viewed as a challenger to Japan’s traditional business culture.

Livedoor, which Mr Horie started in 1997, offers various internet services, including consulting, telecommunications, mobile sites and software development. It also has bought up chunks of other companies and managed to raise money by offering more of its own stock - and it is this area that has drawn prosecutors’ scrutiny.