The change will take effect Oct. 1. The replacement is part of an annual review, with NGK Spark Plug Co. displacing Nippon Sheet Glass Co. in the Nikkei 300, according to the announcement.
“This is a surprise, it’s rather an unusual name for a replacement,” said Tomoichiro Kubota, a senior market analyst at Matsui Securities. “Plus, the parent company SoftBank Group is already in the gauge, and it’s one of the biggest weights within the Nikkei 225. It’s strange that they didn’t consider the parent-subsidiary listing aspect of these two companies.”
SoftBank Group has the second biggest weighting within the Nikkei 225 behind Fast Retailing Co., according to Bloomberg-compiled data.
The index changes will likely prompt passive funds that mirror the Nikkei 225 to adjust their holdings. Investors will likely “take opportunistic buys at SoftBank Corp. shares in the days leading up to the change,” said Makoto Kikuchi, chief investment officer at Myojo Asset Management Co.
“However, impact on SoftBank Corp. shares may be limited due to the current share sale by the parent,” said Kikuchi. SoftBank Group announced last week that it will sell about 1.33 trillion yen ($12.6 billion) of the stock it holds in its mobile unit, worth about a third of its stake.
More shakeup in the index could occur, due to trading company Itochu Corp.’s successful tender offer for the convenience store operator FamilyMart Co. in August. The blue-chip gauge had already replaced Sony Financial Holdings with Japan Exchange Group Inc. earlier in July, also triggered by a buyout of Sony Financial.