Tokyo Gung-Ho on Foreign Stocks

Japanese companies are not the only firms benefiting from the booming Tokyo stock market as shares of International Business Machines, McDonald’s and other big-name foreign firms listed in Tokyo are selling in record numbers.

“Individuals are attracted to these shares as status symbols. They want to tell their neighbors they own a piece of IBM,” said Haruo Nakaharu of Prudential-Bache Securities (Japan).

Volume in the foreign section of the Tokyo Stock Exchange, a backwater of illiquidity just a year ago, hit a record 205.08 million shares in July--nearly double June’s record level, exchange figures show.

In the first seven months of 1987, volume totaled 500.7 billion shares, up 149.6% from a year earlier. The traded value of those shares totaled $15.2 billion, up 269.8%.

The surge mainly reflects purchases by individual investors encouraged by Japanese securities houses, said Hideo Karino, general manager of the Nikko Securities foreign stock trading division.

By buying foreign shares listed in Tokyo rather than overseas, he said, they avoid paying double commission--once in Tokyo and again abroad. Institutional investors, who can buy foreign shares directly, normally bypass brokerages in Tokyo.

“These shares look extremely cheap compared to Japanese stocks,” said Seiyu Nakao, manager of global portfolio strategy for Nomura Securities. American securities typically have price-earnings ratios of 20, compared to about 60 for Japanese shares, he said.

China Plans to Open Stock Exchange

BEIJING

China’s official news agency says the country will soon have a national stock exchange, but Western diplomats are skeptical that technical and ideological barriers can be overcome.

“It can be predicted that it will not be long before the establishment of a national stock exchange in China,” the New China News Agency said. The agency added that stock exchange markets had become necessary in China because of the growth of bond issues.

It put the nationwide volume of bond sales this year at $6 billion and said that “over 40 kinds of bonds (are) being exchanged on markets in various parts of the country.”

However, diplomats expressed skepticism over the prospects for a national stock exchange.

“The places they have set up so far bear little relation to stock exchanges as they are known in the West,” one diplomat said. “The fledgling stock exchanges in Shenyang and Shanghai are just collections of people who know each other, trading half a dozen shares each. The market is not big.”

Another Western diplomat said China did not have the technical infrastructure to support a national stock exchange, and even if it did, there would be ideological objections from conservatives in the Communist Party.

Paper Targets China’s Entrepreneurs

BEIJING

Editor-in-Chief Feng Mai has big plans for China Advertisement and Information, a nationwide newspaper that provides market news to the country’s growing ranks of entrepreneurs.

“At the present time we only provide (a small amount of) information,” Feng said in a recent interview. “In the future, we’d like to provide more (economic) information like the Wall Street Journal and the Financial Times (of London).”

The comment would have been unthinkable in the China of Communist revolutionary leader Mao Tse-tung, but since his death the country has opened to the West and introduced market-style reforms.

China Advertisement and Information, a four-page paper published twice a week, sprang from those reforms and was established in 1984 for businessmen around the vast country.

While it bears little resemblance to the Wall Street Journal, it also has little in common with the party organs that have a near-monopoly in the Chinese media. It is short on political essays and long on articles about capitalist phenomena--supply and demand.

Prominently splashed across its pages are ads for enterprises selling everything from farm machinery to liquor.

Newspapers are usually set up by the state. But Feng, a former reporter for the Guangming Daily newspaper, started China Advertisement and Information with about $810 of his own money.

The newspaper earned $450,000 in 1985, of which 40% was paid to the state in taxes.

Although Feng took the initial risk in setting up the enterprise, he said his salary is set by the state. He receives $54 a month.