The New Nation - Internet Edition

AFP, Tokyo

Japan is losing its appeal among international investors, the head of the Tokyo Stock Exchange warned today following a dire 2007 for Asia's largest stock market.

TSE chief executive Atsushi Saito promised to strengthen the products lineup of his bourse and urged the government and the private sector to tackle tough competition from rival bourses elsewhere in Asia.

"The US subprime mortgage problem cast a long shadow on markets around the world last year," he said at a new year ceremony.

Even so Japan was one of only a few industrialised nations to suffer a drop in share prices for 2007 as a whole, he noted.

"This fact seems to reflect that our country is losing its attractiveness as a place of investment, while 'oil money' and other huge excess funds flow around the world," he said.

"We must draw up concrete action plans in order to increase our attractiveness as soon as possible," he added.

Tokyo's benchmark Nikkei-225 index lost 11.1 percent in 2007 while many other Asian markets posted double digit gains. Even New York's Dow Jones index managed to end the year up 6.4 percent.

The TSE-the world's second-largest bourse and the biggest in the region-has been trying to boost its appeal to foreign investors, who have long complained about tight regulations, high taxes and past technical problems.

In the hope of overcoming global competition and carving out a niche as Asia's leader, the exchange has signed strategic alliances with the New York and London bourses among others.

The Tokyo bourse suffered another beating Friday, its first session of 2008, with the Nikkei index closing down 4.0 percent at a 17-month low on worries about sky-high oil prices and the health of the US economy.

Japan's Financial Services Agency last month unveiled planned measures aimed at strengthening the competitiveness of the country's financial markets.

Under the package, Japan would remove a ban on creating a comprehensive financial market to handle the trading of stocks, bonds and financial and commodity derivatives in about two years.

The watchdog also aims to cut barriers between banks, securities and insurance firms.