Tokyo Bourse Revamped To Lure Investors

The Tokyo stock market was reorganized Monday, April 4, 2022, into three trading segments in the first major reform in decades aimed at imposing stricter listing standards and attracting more foreign investment, Ayano Shimizu reported for Kyodo News.

Photo Insert: The bell of the Tokyo Stock Exchange

The first day of trading following the overhaul ended without confusion. However, trading volume was thin as some investors apparently refrained from making big moves due to caution over possible system glitches caused by the transition.

The Prime, Standard, and Growth markets replace the four sections formerly on the Tokyo bourse, as the operator has tried to create a clearer concept for each segment and revitalize a market that has fallen far behind US peers in terms of capitalization.

By tightening standards on trading liquidity and corporate governance, Tokyo Stock Exchange Inc. hopes the top-tier Prime Market will lure more foreign investors, who made up about 70 percent of the trading value on the former First Section.

But investors and market observers expect the overhaul to create little change as over 80 percent of the roughly 2,100 issues on the First Section slid over to the Prime segment. Some investors said that the restructuring was more cosmetic than actual reform.

The reorganization is the biggest change to the core structure of the Tokyo bourse since 1961, when the First and Second sections were created to accommodate the growing number of listed companies during Japan's period of rapid economic expansion.

The new top-tier consists of 1,839 of the 3,771 listed companies on the bourse, including global names such as Toyota Motor Corp. and Sony Group Corp. The Standard Market for midsize firms and the Growth Market for up-and-comers consist of 1,466 and 466 firms, respectively.

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