A New Mother For Japan

The new exchange is called “MOTHERS.” No, that is no joke. MOTHERS is the rather fanciful acronym for “MarkeT for the High-growth and EmeRging Stocks.” The proposal for MOTHERS ambitiously outlined the market’s purpose: Japan’s economy needs to be revitalized by promoting new industries.

When MOTHERS was launched in November 1999, the faithful believed that Asia’s Internet boom was just beginning. Many had witnessed the staggering success of many Internet companies in the United States and thus thought some promotion for such firms in Japan might replicate that good fortune.

The idea was to make the process for a company to be listed short, unbureaucratic and easy — quite unlike the current process for registering a corporate stock on the Tokyo Stock Exchange. Hence, the idea for MOTHERS. Thus, there was no requirement for a minimum number of years in existence since incorporation. Instead, a clear operational plan would do the job. New customers were to be able to invest into the new technology sooner rather than later.

MOTHERS’ offspring was supposed to grow like healthy children and thus help the Japanese economy as well. Independent auditors would make sure that the little ones would develop properly. And like children, the high-growth companies were not supposed to play with strangers as they were not allowed any transactions that would have been to the disadvantage of the applicant companies.

Yet, for all the good intentions, a few months later there are still only 11 companies on that list. The Internet companies do not sell as well as they used to any more. Even in Germany — not exactly a boom country — when it comes to stocks, by now there are 50 companies listed on its “Neuer Markt.” Yet, in Japan the high-growth sector is not growing, at least not as fast as MOTHERS would wish. Seven of those 11 siblings are even trading below the initial offering price. Apparently, MOTHERS’ protecting wings have failed.

Coincidentally, the last time someone tried to promote his luck in Japan via “mothers” was the Catholic Church. In the 16th century, the missionaries from Spain figured that it was easier to present God’s love through the Virgin Mary — rather than Jesus. From the church’s point of view its success was mixed — there are less than half a million catholic Japanese around these days. If MOTHERS does not do the job this time, it might turn into FATHERS (Failed Aid for the high-growTH and EmeRging Stocks).