Feb 18, 2022 (Nikkei) - Early opinions regarding the Tokyo Stock Exchange's biggest revamp in half a century, due to take effect in April, are hardly upbeat, with most market participants barely apathetic about the move.
The TSE will distill its current sections -- first, second, Jasdaq and Mothers -- into three: prime, standard and growth. But 56% of 120 officials at securities houses and institutional investors in a recent survey by Tokyo-based market analyst QUICK said "nothing will change, in effect."
Only 3% feel that the reform will "make globally viable companies noticeable and contribute to the TSE's internationalization."
Hiromi Yamaji, TSE president, stresses that the revamp is a "great step" toward making Tokyo the bourse of choice "by investors all over the world." However, few market players agree.
The less-than-enthusiastic reception to the reform lies in the fact that the required market capitalization for entry into the prime section is much lower than expected. Another factor is that the bar for entry by existing first section companies has been set too low: Most companies listed on the first section are automatically assigned to the new prime, while the remainder will temporarily be given a spot on condition they meet new criteria within a given time frame.
The TSE estimated that overseas Japan funds require a minimum market cap of 30 billion yen ($259.62 million). The minimum required market capitalization of 10 billion yen in floating shares -- roughly converted into market values in excess of between 10 billion and 28.5 billion yen in outstanding shares -- barely meets the requirements of overseas investors, or so the TSE thinks.
But Japan funds are not necessarily seen as the main investors in Japanese stocks these days because these funds have been disappearing.
