What is the Tokyo Stock Exchange (TSE)?
The Tokyo Stock Exchange (TSE) is the largest stock exchange in Japan, headquartered in the capital Tokyo. The Tokyo Stock Exchange was established on May 15, 1878. As of August 2, 2021, there are 3,786 listed companies on the Tokyo Stock Exchange. Operated by the Japan Exchange Group, TSE is home to the largest and most famous Japanese giants with a global presence, including Toyota, Honda and Mitsubishi.
In addition, TSE provides specific transaction information, real-time and historical index quotes, market statistics, and information about and from specialists. In particular, the Tokyo Stock Exchange acronym TSE should not be confused with the Canadian Toronto Stock Exchange, known by the acronym TSX.
- The Tokyo Stock Exchange (TSE) is Japan’s largest stock exchange and is listed on 3,786 companies (as of August 2021).
- From 1991 to 2001, the TSE shrank dramatically as the Japanese economy shrank after the burst of the Japanese stock and real estate bubble.
- The TSE lists the largest companies in Japan, including Toyota, Softbank, Keyence, Sony, and Chugai.
- The TSE consists of five sections. The first two sections are called the “main market” and include large and medium cap companies.
- Two sections are reserved for start-ups, and the last section of TSE is for professional investors only.
Understand the Tokyo Stock Exchange (TSE)
At the peak of Japan’s asset price bubble in December 1989, the Nikkei 225 Index reached a record high of 38,916. After that, the Japanese economy suffered a recession and the value of Nikkei plummeted, causing the market capitalization of the TSE to shrink dramatically over the next 20 years.
As of August 2021, the directors of the Tokyo Stock Exchange are directors.
(Chairman of the Board of Directors) Hiroki Tsuda; Director and Representative Executive Officer, Group CEO Kiyota Kiyota; Group COO Hiromi Yamaji Director and Representative Executive Officer. Director Gion Morikoh, Director Shizuka Masaki.
As of the end of July 2021, the top 5 stocks by market capitalization (100 million yen) listed on the Tokyo Stock Exchange.
- Toyota Motor Corporation (319,936 yen).
- KEYENCE CORPORATION (147,724 yen).
- Sony Group Corporation (143,445 yen).
- SoftBank Group Corp. (117,798 yen).
- Recruit Holdings (95,465 yen).
When the Tokyo Stock Exchange (TSE) was first opened in 1878, some of its first clients were former samurai and needed a market to trade government-issued bonds.
Other major international exchanges
In addition to the Tokyo Stock Exchange, other major exchanges around the world include the New York Stock Exchange (NYSE), NASDAQ, and the London Stock Exchange (LSE). Each exchange has certain listing requirements that the owner must meet before offering securities for trading.
In general, these requirements include regular financial reports, such as audited earnings reports, and minimum capital requirements. For example, the NYSE has important listing requirements that stipulate that a company must hold at least 1.1 million listed shares at a share price of at least $ 4 per share. The company must have a total pre-tax profit of $ 10 million for the last three fiscal years and at least $ 2 million for each of the last two fiscal years. Nasdaq requires Lister to meet a total pre-tax profit of at least $ 11 million and a minimum bid of $ 4 for the last three fiscal years.
Criticism of the Tokyo Stock Exchange (TSE)
Some market participants complain that the TSE is too large and complex compared to other global exchanges. The TSE consists of five sections. The first section lists the largest companies in Japan and the second section lists medium-sized companies. Together, these two sections are called the “main market.”
Then there are two sections dedicated to startups. These sections are called “Mothers” (high-growth and emerging stock markets) and JASDAQ (further divided into standard and growth subsections). The last section is the Tokyo Pro Market, which is open to professional investors only.
To complicate matters, each of these TSE sections has its own list requirements. As of August 2, 2021, the first section alone contains 2,190 companies, almost double the level of 1990. Plans to reform TSE include simplifying the criteria for separating sections and reducing the number of sections to three: prime, standard, and growth. Another possible change would be to increase the market capitalization requirement and reduce the number of top-listed companies.