Daily Brief Japan: Tokyo Metro, Nikkei 225, TSE Tokyo Price Index TOPIX and more

In today’s briefing:

TOPIX Index Upweights: Great Hit Rate; Strong Trade Performance; A Rare Win!
Nikkei 225 Bounce: Setting Up for Tactical Shorts
Companies May Worked on Raising OP Margin in Minor Ways Without Working on Raising Gross Margins

TOPIX Index Upweights: Great Hit Rate; Strong Trade Performance; A Rare Win!

In the TOPIX Index, some “low liquidity” names carry a liquidity factor of 0.75x resulting in their actual index weights being smaller than their default weights.
These names are reviewed every April and if the liquidity factor of a stock gets removed, the stock will see index inflows from passive trackers of TOPIX.
The results for April 2025 liquidity factor removal have been confirmed and we achieved very high hit rates for our High and Medium conviction baskets.

From Monday’s gloom to Tuesday’s euphoria, the Nikkei 225 (NKY INDEX) staged one of the strongest rebounds — but tariff risks haven’t gone away. Still there.
Here are some tactical analysis and ideas specific for the Nikkei 225 Index to prepare for the key risk ahead: another brutal sell-off.
The targets highlighted by our models (below) come with low reversal probabilities — ranging from just 25% to 50% — this is consistent with weak market rebound dynamics.

Japan’s declining % global GDP and the number of top companies in market capitalization shows that simply boosting profits through yen depreciation left behind the growth speed of global competitors.
While many Japanese companies tried to improve profit margins by reducing labor costs and other expenses, few have managed to improve gross profit margins, which relate to their business models.
The fact that few companies have taken steps to shift to higher value-added products and services is why the yen rate remains a key factor in stock valuations.

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