With the first periodic rebalancing of the Tokyo Stock Price Index (TOPIX) taking place, the number of constituents is increasingly likely to fall below the key 1,000 mark based on the 31st. TOPIX had 1,637 constituents at the end of July, and the rise in large-cap stocks with higher market capitalizations is expected to accelerate the exclusion of smaller stocks.
The calculation date for the first periodic rebalancing of the Tokyo Stock Price Index (TOPIX) has arrived, increasing the likelihood that the number of constituents will fall below 1,000. The article is based on the fact that the new TOPIX will be calculated using market capitalization as its underlying criterion.
TOPIX had 1,637 constituents at the end of July. Junichi Hashimoto (橋本純一), chief quantitative analyst at Daiwa Securities, expects the review based on closing prices on the 31st to result in the exclusion of more small and mid-cap stocks.
Stocks, particularly large-cap names, are likely to rise, relatively increasing the weighting of smaller stocks and consequently changing the distribution of TOPIX constituents.
Looking ahead, attention will focus on how TOPIX's new composition affects the market. The article is available in full to subscribers, but the facts above represent the basic information currently available.