TOPIX to cut constituents by about 40% to 986 under new selection rules
In short
Japan Exchange Group, parent of the Tokyo Stock Exchange, said on October 7 that the Tokyo Stock Price Index (TOPIX) will begin a constituent review at the end of October that cuts the number of stocks by about 40% to 986. Inclusion will depend on measures such as trading activity and free-float market value rather than on which market a company is listed in.
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Japan Exchange Group, the parent company of the Tokyo Stock Exchange, said on October 7 that constituents of the Tokyo Stock Price Index (TOPIX) will begin to be adjusted at the end of October, reducing their number by about 40% to 986, CLS, Jiemian and 36Kr reported. Jiemian and 36Kr credited CCTV News. [ 1 , 2 , 3 ]
The core of the adjustment is a change in selection criteria. Previously, companies listed on the former TSE First Section, now the Prime Market, were essentially all included in TOPIX. Under the new rules, whether a listed company enters the index will depend on indicators such as how actively its shares trade and its free-float market value, rather than mainly on which market it is listed in. [ 1 , 2 ]
According to Japan Exchange Group, as reported by Jiemian, 683 stocks currently no longer meet the inclusion criteria, and their weights in TOPIX will be lowered gradually until they reach zero in July 2028. At the same time, eligible stocks from the Standard and Growth markets will be added; 35 such stocks were selected this time, including McDonald's Holdings Company (Japan), Toei Animation and the ride-hailing app GO. [ 2 ]
TOPIX ranks alongside the Nikkei 225 as one of Japan's main stock indices. Japan Exchange Group said investment assets tracking TOPIX currently total about 160 trillion yen, with one US dollar worth about 158 yen, Jiemian reported. [ 2 ]
Why it matters
TOPIX is one of Japan's main stock indices alongside the Nikkei 225, and Japan Exchange Group said about 160 trillion yen of investment assets currently track it. The 683 stocks no longer eligible will see their index weights cut gradually to zero by July 2028, while 35 stocks from the Standard and Growth markets will be added.
Key facts
- Japan Exchange Group, parent of the Tokyo Stock Exchange, announced the TOPIX changes on October 7. [ 1 , 2 , 3 ]
- The TOPIX constituent adjustment begins at the end of October and reduces the number of constituents by about 40% to 986. [ 1 , 2 , 3 ]
- Under the new rules, inclusion depends on indicators such as trading activity and free-float market value, not mainly on the market where a company is listed. [ 1 , 2 ]
- Previously, companies listed on the former TSE First Section (now the Prime Market) were essentially all included in TOPIX. [ 1 , 2 ]
- 683 stocks no longer meet the inclusion criteria; their weights will be reduced gradually to zero by July 2028. [ 2 ]
- 35 stocks from the Standard and Growth markets were selected, including McDonald's Holdings Company (Japan), Toei Animation and the ride-hailing app GO. [ 2 ]
- About 160 trillion yen of investment assets currently track TOPIX, according to Japan Exchange Group (about 158 yen to the dollar). [ 2 ]
Confirmed by several sources
Still unclear
- 683 stocks will be phased out of TOPIX, with weights falling to zero by July 2028. Reported only in the Jiemian article citing CCTV News.
- 35 Standard and Growth market stocks, including McDonald's Holdings Company (Japan), Toei Animation and GO, are being added. Reported only in the Jiemian article citing CCTV News; the full list is not given.
- How the reduction to 986 relates to the 683 removals and 35 additions. The documents do not give the current number of constituents or explain how the figures reconcile.
- The core of the change is new selection criteria based on trading activity and free-float market value rather than listing market. Reported by a single source so far
What local media are saying
Timeline, local time
- October 7: CLS reports Japan Exchange Group's announcement that TOPIX constituents will be cut by about 40% to 986. [ 1 ]
- October 8: Jiemian publishes the CCTV News report with details on the 683 stocks to be phased out and 35 additions. [ 2 ]
- October 8: 36Kr publishes a short CCTV News item on the cut. [ 3 ]