Japan Exchange Group, Inc.

The Tokyo Stock Exchange is preparing a major restructuring of the Topix index, reducing its constituent stocks by about 40% to fewer than 1,000 companies, down from roughly 1,600, in a bid to attract more investment. Exchange officials said on Wednesday that constituent selection will be based on factors such as market capitalization and trading volume. For 683 stocks selected from the existing list, their index weightings will be reduced on a quarterly basis starting from October 30. On the same day, 35 new stocks will be added to the index, including McDonald's Holdings (Japan) and Toei Animation. Japan Exchange Group, which operates the exchange, said that stocks that fail the October 2027 review will be removed from the index entirely by the end of July 2028, and from October 2028 onward, index constituents will be reviewed and rotated annually.

Japan Exchange Group, the operator of Japan's stock exchanges, has unveiled a plan for a major restructuring of the Topix index, reducing its constituent stocks by about 40% from roughly 1,600 companies to fewer than 1,000, in a bid to make Tokyo's benchmark gauge more attractive to investment money. Under the plan, 683 companies selected from the current list of constituents will be phased out on a quarterly basis starting October 30. At the same time, the market will add 35 new companies to the index on the same day, including McDonald's Holdings Co. (Japan) and Toei Animation Co. Japan Exchange Group added that stocks that fail to meet the new assessment criteria in October 2027 will be removed from the Topix index entirely by the end of July 2028. The selection of stocks will be assessed on several key factors, such as market capitalization and trading volume. Kyodo News reported that the Topix index originally comprised all stocks listed on the first section of the Tokyo Stock Exchange, but after a major market restructuring in 2022, those stocks were reclassified, with most moving to the newly established main board, or Prime Market. The Tokyo Stock Exchange will begin reviewing and revising the list of stocks in the Topix index on a regular annual basis starting in October 2028.

Japan Exchange Group announced on the 24th that it has revised upward its consolidated net profit forecast for the fiscal year ending March 2027 from 98.5 billion yen to 105 billion yen. That represents a 32.7 percent increase from the previous year. The main reason is that, in light of recent market conditions, the company raised its outlook for average daily trading value of stocks and other securities by 800 billion yen from its previous forecast, to 11 trillion yen. Its operating profit forecast was also raised from 145.5 billion yen to 154.5 billion yen, and its annual dividend forecast was revised upward from 77 yen to 82 yen. As assumptions for the revision, the average daily trading volume for long-term government bond futures was set at 52,000 units, TOPIX futures at 88,000 units, and Nikkei Stock Average index options at 38.5 billion yen, while Nikkei Stock Average futures were set at 133,000 units.

Japan Exchange Group on the 28th revised upward its consolidated net profit forecast for the fiscal year ending March 2027 to 98.5 billion yen. The outlook shifted from an initial 2.1 percent decline to a 24.5 percent increase, as the company raised its assumed daily average stock trading value by 2.7 trillion yen to 10.2 trillion yen, and revised TOPIX futures trading up by 1,000 units to 87,000 units. The annual dividend forecast was also raised from 61 yen to 77 yen per share, with the interim dividend increased from 30 yen to 38 yen and the year-end dividend from 31 yen to 39 yen.

AIRA Group and the Tokyo Stock Exchange successfully held a special seminar titled Decode Japan's Investment Landscape, offering perspectives on the direction of Japan's stock market amid the AI and semiconductor trends driving the global economy. The event drew a strong turnout of high-net-worth investors and interested participants. Mr. Masanori Yoshida from Japan Exchange Group shared updates on governance reforms reflected in rising dividends, share buybacks, and increasing mergers and acquisitions. Meanwhile, Mr. Naohide Une from Investment Lab noted that Japan's stock market has delivered an average annual return of 13.4% over the past 15 years, and presented a three-group AI investment framework: direct semiconductor plays, actual AI users, and beneficiaries of AI-driven labor replacement. He emphasized that opportunities extend beyond blue-chip stocks to mid- and small-cap companies involved in data centers and automation. Mr. Hirofumi Hayashi from Sumi Trust added that global active funds remain significantly underweight Japan, implying future buying potential, and cited Warren Buffett's gradual increase in Japanese trading company holdings as evidence of improved cash flow quality and governance. All three panelists agreed that the market's rise is supported by structural governance reforms and sustained corporate profit growth. Many large listed Japanese companies have expanded their revenue bases internationally, benefiting from global economic growth, a weaker yen, and the semiconductor investment cycle, as reflected in improving earnings per share and return on equity. While Japan may lack leaders in graphic chip design or cutting-edge foundries, it remains strong in chipmaking machinery and equipment, industrial materials, infrastructure equipment testing, and physical automation. Mr. Pairoj Luengthalerngpong, Chief Executive Officer of AIRA Securities Public Company Limited, said that combining perspectives from a market regulator, the private sector, and a global financial institution gives Thai investors comprehensive, in-depth insights for crafting investment strategies in Japan's capital market. He summarized three key takeaways for Thai investors: Japan's stock market continues to grow steadily on strong earnings; a gradual accumulation strategy should be used to mitigate timing risk; and focus should be on earnings fundamentals and governance rather than trading on daily news flow, especially as index returns become concentrated in a handful of AI and semiconductor stocks. This collaboration between AIRA Group and the Tokyo Stock Exchange underscores a commitment to promoting investment knowledge and expanding access for Thai investors to information and opportunities in leading Japanese companies.

A bill to amend the Financial Instruments and Exchange Act and the Payment Services Act, which for the first time classifies crypto assets as financial products, was passed and enacted at the upper house plenary session on the 15th. Under the amendment, the name of crypto asset exchange service providers will be changed to crypto asset trading service providers, and the maximum prison sentence for unregistered sales will be raised to up to 10 years, with fines of up to 10 million yen. Insider trading regulations will also be introduced for the first time in the virtual currency sector, prohibiting trading based on undisclosed information. On the tax front, the bill includes a shift from the current comprehensive taxation to separate self-assessment taxation at a rate of around 20 percent, along with a three-year loss carryforward deduction, with enforcement scheduled for fiscal 2027. Furthermore, an institutional framework will be established to enable the creation of crypto asset ETFs, and Japan Exchange Group is eyeing a listing around 2027.