A major reshuffling of TOPIX constituents is expected next month, with small-cap stocks likely to be excluded. The number of constituents is expected to fall from approximately 1,600 to below 1,000, with the tighter selection process expected to improve the index's functionality.
TOPIX, one of the key benchmarks for Japan's equity market alongside the Nikkei Average, is expected to undergo a major review under new criteria scheduled to take effect next month. Estimates by securities firms indicate that the number of constituents, currently around 1,600, is likely to be reduced to fewer than 1,000.
The new criteria are expected to narrow the selection of stocks, including by excluding small-cap stocks. This is reported to be likely to significantly change the composition of TOPIX constituents.
Market participants believe that the changes will improve TOPIX's functionality. The specific timing of the changes and details of how the new criteria will be applied remain subject to future announcements.