Tokyo Markets Nikkei Crash, Livedoor and Entrepreneur Takafumi Horie

Submitted by Craig Strzelecki on 20 January, 2006 - 01:15

This may be yesterdays news but its nice to keep a record of news reports that really influence huge shifts in market mood and opinion. What happened in Japan a few days ago is one example of how market sentiment can heavily sway market price. Keep this reference in mind when you trade! You would have to be living under a rock if you didn't hear about the Tokyo Markets Nikkei Crash and about how the Nikkei index plunged 460 points, or 2.9 per cent - the biggest one-day loss since May 1994. At one point the market was 700 points down. The Tokyo Stock Exchange was in meltdown and it closing early after its computers were overwhelmed with sell orders in one of Japan's highest profile companies: Livedoor.This is the second time the Nikkei has been halted in one year. If you missed that news... you've got to read this.

Trading in the shares in the Livedoor triggered a selling frenzy, and the Nikkei exchange suspended trade early in the day after a 14.3 per cent fall on Tuesday. Basically all this was the consequence of allegations that Livedoor and its entrepreneur Takafumi Horie, one of Japan's most colourful and popular young entrepreneurs, falsified financial statements to the stock exchange, including inflating the value of its assets and sales figures. And the raids were all televised as camera crews were tipped off and were already on scene as investigators arrived. Guess what happened next?