Japan Small & Mid-Cap Sector "TOPIX revisions and what follows" Watanabe

Research evidence excerpt

Japan Small & Mid-Cap Sector "TOPIX revisions and what follows" Watanabe

Global Research

1 July 2026ab

Japan Small & Mid-Cap Sector Equities

JapanTOPIX revisions and what follows

Mariko Watanabe

Analyst

Stage 2 of TOPIX revisions mariko.watanabe@ubs.com

+81-3-5208 6297

In June 2024 (overview) and September 2024 (details), the Tokyo Stock Exchange (TSE)

announced the criteria for stock removals in Stage 2 of TOPIX index revisions (Link). As a Masae Nakazono

Associate Analystresult of the Stage 1 revisions (October 2022-January 2025), TOPIX constituents were

masae.nakazono@ubs.com

reduced from around 2,200 stocks to 1,654 (as of end-March 2026). Stage 2 of the +81-3-5208 6257

revisions is slated to begin in October (October 2026 through end-July 2028). In January

2025, TSE stated that the number of TOPIX constituents after completion of the Stage 2

revisions would total about 1,200 stocks, but as of March 2026 it had modified this

figure to 1,050 names (Figure 3). Reflecting the rise in large-cap stocks, we see the

possibility that the number of constituents in the new TOPIX could decline to around

960 (based on end-June standards).

Over 700 stocks could be removed from TOPIX, potentially reducing the number

of constituents to below 1,000

Based on free float market capitalisation at the end of June, we have identified

candidates for removal from and adoption in the new TOPIX. Following the rise in large-

cap stocks, 713 companies are candidates for exclusion from the new TOPIX based on

end-June free-float market capitalisation, while 35 companies from the TSE Standard

and Growth markets are candidates for inclusion (Figures 10-21). As the calculation base

date for the new TOPIX is 31 August, the actual constituents may differ depending on