The Japanese benchmark professionals actually use — broader than the Nikkei, weighted by company size rather than share price, and quietly rebuilt over the past few years.
1969Launched
1,000+Constituents
Float-adj. capWeighting
Rule-basedSelection
TOPIX — the Tokyo Stock Price Index — was launched in 1969 by the Tokyo Stock Exchange with a base value of 100. Where the Nikkei 225 is a committee-selected, price-weighted sample modeled on the Dow, TOPIX is broad, rule-based and weighted by float-adjusted market capitalization.
Both measure the same market. They frequently disagree about what it did, and when they do, TOPIX is generally the one to believe.
Why the two diverge
Two readings of one marketNikkei 225 against TOPIX
The same structural contrast as the Dow versus the S&P 500 in the United States, for the same historical reasons.
Because a handful of high-priced Japanese shares carry disproportionate weight in the Nikkei, the two indexes can move by materially different amounts on the same day. Fund managers benchmarked against TOPIX are measured on the broader, size-weighted reading.
The market restructuring
In April 2022 the Tokyo Stock Exchange replaced its old market segments with three new ones — Prime, Standard and Growth — intended to raise listing standards and end a long-criticized situation in which the top segment had become crowded and undemanding.
TOPIX was decoupled from those segments. Rather than simply tracking one tier, constituent selection moved to liquidity-based criteria, with companies falling below the threshold phased down in weight gradually rather than dropped at once. The transition was deliberately slow, to avoid forcing index funds into disorderly selling.
The effect over time is a narrower, more liquid TOPIX than the sprawling index of the 2010s. Anyone comparing long-run TOPIX history should know the constituent base has been reshaped mid-series.
The reform sits alongside a broader governance push — pressure on cross-shareholdings, capital efficiency and board independence — that has changed how Japanese companies allocate capital. Index design and corporate governance moved together here in a way rarely seen elsewhere.
Facts worth knowing
Base value 100, set at January 1968Backdated a year before the 1969 launch.
Free float matters more here than almost anywhereJapanese cross-shareholdings between companies have historically been large, and the float adjustment is what stops those locked-up stakes from distorting weights.
The Bank of Japan became a major holderYears of asset purchases left the central bank with an unusually large position in domestic equity funds — a distortion with no real parallel in other developed markets.
Sub-indexes are widely usedTOPIX Core 30, Large 70, Mid 400 and Small divide the index by size for more targeted mandates.
It is a price-return index by defaultAs with most benchmarks, dividends are excluded from the headline figure.
Common questions
Should I use TOPIX or the Nikkei?
TOPIX for understanding the Japanese market; the Nikkei for following what gets reported. The Nikkei's price weighting makes it a poor measure of aggregate market value.
What changed in 2022?
The Tokyo Stock Exchange restructured into Prime, Standard and Growth segments, and TOPIX shifted to liquidity-based constituent criteria with a phased weight reduction for companies falling short.