Smartphone game-maker DeNA, builder Haseko join Nikkei 225

Bloomberg

DeNA Co., the social website operator that’s working with Nintendo Co. on smartphone games, and condominium builder Haseko Corp. will join Japan’s Nikkei 225 Stock Average.

The companies will be added to the measure after the close on Sept. 30, replacing Nitto Boseki Co. and Heiwa Real Estate Co., index compiler Nikkei Inc. said in a statement Friday.

“The inclusion of DeNA, at least for me, is a surprise,” said Satoshi Tanaka, an analyst at Daiwa Securities Co. “But it makes sense, as its agreement with Nintendo has boosted shares as well as liquidity.”

DeNA has surged 43 percent since mid-March, when it announced a tie-up with Nintendo to jointly develop games for smartphones. Analysts project the shares will gain another 47 percent in the next 12 months.

For Haseko, which defaulted on about $3.6 billion in debt in 1999 after the Japanese real estate bubble burst, the index inclusion is the latest sign of how Prime Minister Shinzo Abe’s economic policies are spurring a property market revival.

The Nikkei 225 peaked in June at the highest level since 1996 as a weaker yen and corporate governance overhaul boosted earnings and shareholder payouts.

The measure has fallen 15 percent since then amid a global equity selloff spurred by concern about an economic slowdown in China and the prospect of higher interest rates in the U.S. The Japanese gauge is now just 2 percent higher this year.

DeNA slid 3.4 percent in Tokyo trading Friday before the announcement, paring its 2015 gain to 39 percent. After beginning as an online auctions company in 1999, DeNa introduced Mobage, a mobile social network, in 2006, and within three years followed with social mobile games including Kaito Royale and Pirate Treasure. The company is also seeking to develop self-driving cabs.

Haseko fell 3.2 percent Friday in Tokyo, and is up 34 percent this year. The company is forecasting net income of ¥35 billion ($294 million) in the current fiscal year, almost triple its profit in the period ended March 2013.

Nitto Boseki, which Nikkei said was removed from the index because it contained too many materials companies, has advanced 20 percent in 2015. Heiwa Real Estate sank Friday to the lowest since February 2013. It was cut from the equity gauge due to a decline in liquidity, Nikkei said.

Prior to Friday’s announcement, Nomura Holdings Inc. had predicted Rakuten Inc. and NTT Urban Development Corp. may be added to the Nikkei 225, replacing Nitto Boseki and Heiwa Real Estate.

The brokerage also said Toshiba Corp., embroiled in an accounting scandal, was at risk of being removed. Mizuho Financial Group Inc. and SMBC Nikko Securities Inc. expected no changes, while Daiwa accurately predicted the two stocks that were cut.

The Nikkei reviews its index once a year, assessing trading liquidity and whether it has the right balance of industries in the measure. Any proposed changes are run past a committee of academics and market professionals, according to the Nikkei website.

Unlike most global stock benchmarks, the Nikkei 225 is price-weighted, meaning a company’s share price rather than its market value determines its impact on the gauge. Uniqlo brand-operator Fast Retailing Co. made up 10.3 percent of the index at Thursday’s close, followed by mobile carrier SoftBank Group Corp. and robot-maker Fanuc Corp.