S&P launches broad equity index for Japan

JAPAN - Standard & Poor’s have launched S&P Japan 500, a broad equity index covering 88% of the Japanese equity market.

Under an alliance with information provider Toyo Keizai, the index builds on the S&P TOPIX 150 large-cap index, adding two new market-cap indices, the S&P Japan MidCap 100 and the S&P Japan SmallCap 250.

S&P says the index is designed to provide a broader representation of the Japanese market and to serve as an investable index by adjusting shares of constituent companies for free float. It also offers greater flexibility by covering large, mid and small-cap segments of the market.

Toyo Keizai has agreed to provide S&P its database services for the maintenance of the index, along with marketing support of the newly created S&P indices in Japan.

Akiyoshi Oba, general manager of Mizuho Trust & Banking Co, says there have been numerous problems pointed out in current primary index used by plan sponsors and investment funds. Plan sponsors have been calling for more indices in order to make their asset management more efficient.

“We believe that the S&P Japan 500, which represents the Japanese market well with 500 liquid stocks, will serve the interests of the investing public. Asset managers are now able to actively respond to plan sponsors’ needs by providing funds based on this new index,” he says.

Chiaki Furuta, chief investment officer at Toyota Asset Management, agrees. “Japanese pension plan sponsors are giving greater importance to passive investment, which highlights the need for a better stock index. The launch of the S&P Japan 500, particularly in today’s environment, offers investors a timely choice.”