TOKYO (AP):
JAPANESE STOCKS plunged for a second day on Wednesday, bringing the market's two-day loss to almost 6 per cent as the exchange halted trading early amid investor jitters about a widening criminal investigation of Internet start-up Livedoor Co.
The sell-off was so heavy that the Tokyo Stock Exchange pre-empatively closed trading 20 minutes early so as to avoid overwhelming its computerised trading system -- the first time the bourse has shut down early for capacity reasons.
The Nikkei 225 index dropped 464.77 points, or 2.9 per cent, to close at 15,341.18 points, its biggest one-day drop since May 10, 2004. The index had fallen 2.8 per cent Tuesday.
"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 so-called "Livedoor shock", as dubbed by the Japanese media, started Monday evening when Tokyo prosecutors raided the company's offices to investigate allegations that the company had violated securities laws by giving false information.
PROBE EXPANDED
Media reports Wednesday said the probe had expanded, with the Yomiuri newspaper reporting that Livedoor is suspected of concealing a 1 billion yen (US$8.7 million) loss for the full-year results ending September 2004.
The reports clearly spooked investors, some of whom may have simply been looking for an excuse to sell after the market's 40 per cent gain last year.
The decline could also be attributed to investor disappointment over earnings results Tuesday from U.S. chipmaker Intel Corp. and Web giant Yahoo Inc., which were lower than analysts' expectations.
Livedoor's 33-year-old chief executive, Takafumi Horie, denies any wrongdoing, and authorities would not comment on the Yomiuri report.
The case has garnered intense media attention partly because of the fame of Horie, a geeky entrepreneur who has made unsuccessful attempts to buy media conglomerate Fuji Television Network Inc. and a baseball team.
Favouring jeans and T-shirts over business suits, Horie frequently appears on TV and is viewed as a challenger to Japan's traditional business culture.
