Internet investment company Softbank Corp last week became one of the five largest companies in Japan in terms of market capitalization, overtaking electronics giant Sony Corp in the process.
Analysts said that while there is a lack of fundamental factors to explain the rapid rise of the stock, it could still carry on increasing in value as Japan emulates the internet fever which has gripped markets in the US and elsewhere.
In the past 11 months retail investors have poured money in Softbank and other internet-related stocks on the Tokyo Stock Exchange. So far this year Softbank’s shares have appreciated in value by more than 1,000%. At close of business last Thursday (Nov 26) Softbank’s market capitalization stood at 8.16 trillion yen (nearly $78bn), compared to 7.8 trillion yen ($74bn) for Sony. It had surged by more than two trillion yen in the preceding two weeks.
Softbank holds stakes in about 120 internet-related companies, although its revenues in the sector are still slim. In the half-year to Sept 30, nearly 60% of Softbank’s 201.6bn yen ($1.92bn) in revenues came from software and router sales — its original lines of business. Internet-related revenues were a modest 8.4bn yen($80m).
Its biggest attraction to investors is the massive unrealized gains on holdings of 12 publicly-listed internet-related shares, including Yahoo! Inc and E*Trade in the US. But its market value is still more than double those gains, which stood at 3.41 trillion yen ($32.5bn) on Thursday.
