The Japan Exchange Group will announce the largest restructuring in the history of the Tokyo Stock Exchange Index on Wednesday. This adjustment will reduce the number of constituents of this major stock index with the widest coverage in Asia and force Japanese companies to increase their own market appeal. This adjustment is the second phase of the Tokyo Stock Exchange operator's multi-year reform plan to improve the investability of the Tokyo Stock Exchange Index. For a long time, the index has been very special among the world's major indices. The number of constituent stocks is huge, including hundreds of small-cap stocks with poor liquidity. Daiwa Securities and SMBC Nikko Securities estimate that under stricter inclusion standards, about 680 companies may be transferred out of the index, and it is expected that about 35 new stocks will be included, including Japan's McDonald's Holdings and Ferrotec. The reforms have had a profound impact on investors around the world. Junichi Hashimoto, chief quantitative analyst at Daiwa Securities, estimated in September that the passive asset tracking index is about 166 trillion yen. Individual stocks transferred out will face passive selling pressure from index funds; those included in the index will receive stable purchases from passive funds, and at the same time enter active fund managers' stock selection horizons to help the fund outperform the index.

The Japan Exchange Group will announce the largest restructuring in the history of the Tokyo Stock Exchange Index on Wednesday. This adjustment will reduce the number of constituents of this major stock index with the widest coverage in Asia and force Japanese companies to increase their own market appeal. This adjustment is the second phase of the Tokyo Stock Exchange operator's multi-year reform plan to improve the investability of the Tokyo Stock Exchange Index. For a long time, the index has been very special among the world's major indices. The number of constituent stocks is huge, including hundreds of small-cap stocks with poor liquidity. Daiwa Securities and SMBC Nikko Securities estimate that under stricter inclusion standards, about 680 companies may be transferred out of the index, and it is expected that about 35 new stocks will be included, including Japan's McDonald's Holdings and Ferrotec. The reforms have had a profound impact on investors around the world. Junichi Hashimoto, chief quantitative analyst at Daiwa Securities, estimated in September that the passive asset tracking index is about 166 trillion yen. Individual stocks transferred out will face passive selling pressure from index funds; those included in the index will receive stable purchases from passive funds, and at the same time enter active fund managers' stock selection horizons to help the fund outperform the index.