Shares of SoftBank Corp. closed 0.8 percent higher Wednesday after news that it will be added to the 225-issue Nikkei average, the blue-chip equity gauge.
The mobile phone unit of SoftBank Group Corp. will replace chemicals maker Nippon Kayaku Co., whose shares tumbled 9.9 percent, the most since May 2016. The changes will take effect Oct. 1, the Nikkei announced as part of an annual review.
Shares of other companies that had been touted as possible Nikkei additions fell, with Kakaku.com Inc. sliding 2.9 percent and Zozo Inc. dropping 1.5 percent.
"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 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, the impact on SoftBank Corp. shares may be limited due to the share sale by the parent, Kikuchi added. SoftBank Group announced last week that it will sell about ¥1.33 trillion of the stock it holds in its mobile unit, about a third of its stake.
Pan-Pacific Delta One analyst Brian Freitas expects passive funds to buy 25 million to 26 million shares of SoftBank Corp., equal to about 2.2 percent of its "real world float,” or three days worth of its average volume.
It was a surprise that FamilyMart Co. wasn’t deleted from the Nikkei 225 following Itochu Corp.’s successful tender offer for the convenience store operator in August, Freitas said. That may now happen instead in an ad hoc review or after the implementation of the share consolidation, said the analyst, who sees Zozo, Kakaku.com and Square Enix Holdings Co. as possible replacements.