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Investing in Japan

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What You Need to Know

Japanese Stock Market

The Tokyo Stock Exchange (TSE) is the third largest stock exchange in the world with 2,292 companies listed, and as of 2010, its combined market capitalization has reached US$3.8 trillion. It is incorporated as a kabushiki kaisha, which is literally translated as “stock companies” and is defined under Japanese law as a type of corporation. The TSE is currently being run by nine directors, eight executive officers and four auditors.



The Tokyo Stock Exchange was established in May 15, 1878 as an incorporated association with members as shareholders. Trading began on the 1st of June of that same year. The TSE was reorganized during World War II in compliance with the Japan Securities and Exchange Law and all of the 11 exchanges in Japan were unified. This new Japan Securities Exchange was later dissolved in April 1947 and the TSE officially resumed trading on its own on May 16, 1949 along with the stock exchanges in Nagoya and Osaka. The 1980s was an exceptional decade for the Japanese stock market. It rose tremendously from 1983 to its peak in 1990 when the TSE had the world’s largest stock market capitalization as it made up 60% of it at that time. The TSE’s value dropped after that, but they remain to be a force to reckon with as the 3rd largest in the world today. In 2001, the TSE was restructured from an incorporated association to the stock company that we know today.



It’s hard to talk about the Japanese stock market without further discussion on its main indices. The Nikkei 225, or simply called the Nikkei, is calculated by the Nihon Keizai Shimbun on a daily basis. It is often compared to the Dow Jones Industrial Average because it is currently the most quoted average in terms of Japanese Equities. The TSE’s other main index is the Tokyo Stock Price Index or the TOPIX. It tracks all companies (domestic) of the First Section of the TSE and is calculated and published every second by the TSE itself.

As the 3rd largest stock exchange in the world and its alliance network of different stock exchanges around the world, the Tokyo Stock Exchange still has a large impact on world trading. This is why it is important to get a Japanese stock market overview to be able to understand it better.