TOPIX Next-Generation Review: Broad Reshuffle, Significant Flow Implications

JPX announced the results of the first periodic TOPIX review under the next-generation framework after market close on 7 October, effective from the 30 October open. The review adds 35 Standard and Growth Market stocks, designates 683 existing constituents as transition names subject to further eligibility review, and changes the free-float weight (FFW) or liquidity factor for over 450 non-transition constituents. The additions will enter at 75% of their standard FFW, rising to 100% in October 2028. Transition-name weights will decline over eight quarterly stages through July 2028, starting at a 0.875 transition factor in October and falling by 0.125 per quarter thereafter, with re-evaluation in October 2027. Following the review, the number of TOPIX constituents will increase from 1,634 to 1,669 at end-October before declining to a minimum of 986 by July 2028. On a pro forma basis, we estimate TOPIX free-float market capitalization will increase from US$4.89tn currently to US$5.01tn a