Wed, Jun 07, 2017 - Page 10 News List

Bitcoin madness spreads to smaller Japanese listings

Bloomberg

The speculative frenzy in bitcoin yesterday spilled over onto the Tokyo Stock Exchange.

Remixpoint Co, Infoteria Corp and Fisco Ltd have all seen volatile swings in their share prices after announcing businesses related to digital currencies.

Remixpoint, which has more than doubled since tying up with Peach Aviation Ltd to let customers pay for tickets with bitcoin, fell as much as 9 percent in Tokyo.

Infoteria, up more than 50 percent over the past month, is testing ways to let shareholders vote by proxy using blockchain, bitcoin’s underlying technology.

Fisco, a financial information services provider, last year began operating a bitcoin exchange and is up about 25 percent since early last month.

Infoteria declined 3.7 percent, while Fisco was down 2 percent.

All of these gains coincide with bitcoin’s rally, with the value of the virtual currency doubling against the US dollar since early last month. That has made the stocks of the these small-cap companies an attractive way for speculators to invest in cryptocurrency markets without buying them directly.

That is because investors can make bets via their brokerage accounts instead of taking risks with bitcoin exchanges, said Naoki Murakami, a well-known day trader in Japan.

“From about a month ago, when all these virtual currencies started spiking like crazy, we began seeing the so-called ‘stocks of the virtual currency bubble,’” said Murakami, a frequent speaker at investor conferences. “Not everyone is sure they can trust bitcoin exchanges, and some don’t have accounts there. That’s why they’re using the stock market to speculate.”

It is probably not a coincidence that Japan’s stock market is being seen as a proxy for bitcoin investments.

In April, Japanese Prime Minister Shinzo Abe’s government legalized digital currencies as a form of payment and placed rules around audits and security.

That lent credibility to digital currencies, leading to some Japanese companies seeking partnerships with bitcoin start-ups.

Remixpoint is the biggest of the bunch, with a market value of ¥31.3 billion (US$285.5 million).

Remixpoint was the second-biggest gainer in the TSE Mothers Index over the past month, helping the gauge soar to the highest level in a year.

Remixpoint is trading at 514 times earnings, the highest among all Japanese technology companies worth more than ¥30 billion.

Another reason these stocks can become proxies for bitcoin is due to Japan’s relatively loose listing laws, some of which require no income and a market value of as little as US$10 million before a company can go public.

That has made the Tokyo Stock Exchange home to hundreds of small companies.

“It’s pure frenzy,” Murakami said.

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