An Overview Of Tokyo Stock Market

In terms of monetary volume, the New York Stock Market is the largest stock exchange market in the world. The Tokyo Stock Market is in a very close second position. This article looks into the internal composition, functioning and characteristics of the stock market in Tokyo.

Under Japanese corporate law, Kabushiki Kaisha is defined as a compnay or a corporation which is constituted for the purpose of trading in shares and stocks.

The Tokyo Stock Exchange or TSE which is more or less representative of the Tokyo Stock Market is formed as a Kabushiki Kaisha. At the very helm of this Japanese Corporation are a total of nine directors, four auditors and eight executive officers. These people are in charge of functioning and management of the Tokyo Stock Exchange.

The TSE started functioning in its current name on May 16 1949.

There are a total of 2366 companies whose stocks are traded in the Tokyo Stock Market. The TSE lists the companies under three different categories or sections.

First Section. This section is for companies which are of large size and have a high market cap. As of March 2006, there are 1,721 companies listed under this section.

Second Section This section is for companies which are of medium size. As of March 2006, there are 489 companies listed under this section.

Mothers Section Mothers is an acronym which stands for 'Market of the high growing and emerging stocks'. This section lists startup and venture companies which need to raise capital. It offers investors with different flavors in terms of choice of investment.

The two main share indices used on the Tokyo Stock Market are the Nikkei and the Topix. Both of these indices are based on weighted price average. The Nikkei is one of the most respected of indices not just in the Tokyo Stock Market but also the world.

The Tokyo Share Market has witnessed a lot of ups and downs and not just only in share price indices. Th Nikkei touched an all time high of 40000 points in the year 1989. This was an artificial rise which was brought about by faulty monetary policies of Japanese Institutions.

The bubble burst in the early 1990s and what followed was a decade long slump in share prices and trading. Slowly and very painfully, the economy corrected itself and investor confidence began to return.

In 2005 the signs of recovery became evident. Analysts feel that the upswing in the Tokyo Share Market is a durable one. They feel it should last as it is based on substance and strong fundamentals. The Japanese Economy is turning into an economy which is laying emphasis on domestic consumption and growth, and not just exports.