Japanese Government Shifts Emphasis to Topix

Japanese Government Shifts Emphasis to Topix

The Nikkei 225 Average has long reigned as the dominant Japanese index, but the Tokyo Stock Exchange's Topix index is quickly strengthening its reputation in status-conscious Japan.

Topix, which includes 1,300 of Japan's largest firms, is increasingly viewed as a better barometer of the Japanese economy than the Nikkei 225, run by the Nikkei newspaper groups.

The Nikkei suffered from the backlash to a poorly handled transition to the "new economy." In April, the index's creators announced plans to replace 30 old-line industrial firms in the Nikkei with 30 newcomers, including several internet and other high-technology firms. The move was seen as too abrupt by the powerful Japanese Ministry of Finance. A subsequent slide of 18% in the Nikkei provided extra ammunition for irate investors and critical market analysts favoring Topix.