TREE NEWS update: Japan Exchange Group said the Tokyo Stock Exchange will begin revising its TOPIX index constituents at the end of October, reducing the number of constituents by about 40% to 986. The change stems from new selection criteria: inclusion will depend on trading activity and free-float market value, rather than mainly on which market segment a company is listed on, replacing the previous system under which nearly all former First Section firms were included.
Tokyo Stock Exchange to Cut TOPIX Constituents by About 40% from Late October
AI take
This is a structural overhaul of one of Asia's most widely tracked benchmarks, not a routine rebalancing. Shifting inclusion from market segment to liquidity and free-float criteria means the index will better reflect investable capacity, which matters for the many passive products and institutional mandates benchmarked to TOPIX. The open question is how the roughly 40% of names losing inclusion adjust, and whether index-tracking flows and liquidity in those excluded shares settle smoothly through the phased revision.
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