Tokyo exchange to remove nearly 500 firms from Topix index

The Tokyo Stock Exchange (TSE) is set to remove almost 500 firms from the Topix index (.TOPX) of primary domestic firms in the bourse’s latest reform aimed at attracting more foreign investors.

High-end restaurant operator Hiramatsu (2764.T), funeral services provider Kosaido Holdings (7868.T), as well as regional banks such as Nagano Bank (8521.T) and Tomato Bank (8542.T) are among the 493 companies that will be excluded from the index, according to JPX Market Innovation & Research, a unit of Japan Exchanges Group Inc (8697.T).

The move follows the TSE’s biggest overhaul in a decade in April when it tightened criteria and reorganised its markets into three - “prime”, “standard” and “growth” - to highlight profitable firms whose governance meets global standards.

More than 2,000 companies which were on the main board of the exchange - now the prime market - are in the Topix. They include firms that did not meet the prime market criteria during the reform and whose shares are now traded on the two other markets.

The TSE, operated by Japan Exchanges Group, plans to gradually remove firms whose market capitalisation in tradable shares is less than 10 billion yen ($69 million) from the Topix index, which is tracked by more than 70 trillion yen worth of investment vehicles, including exchange-traded funds mainly held by the Bank of Japan.