The Tokyo Stock Exchange (TSE/TYO), located in Japan's capital city, is one of the largest and most influential stock exchanges in the world. As the heart of Japan’s capital markets, the TYO plays a critical role in the global economy and offers access to some of the most iconic and innovative companies.
Founded over a century ago, the Tokyo Stock Exchange has become a financial powerhouse, attracting both domestic and international investors. In this article, we’ll explore the history, structure, key divisions, and global impact of Japan's leading exchange, often referred to as the TSE, TYO, or Tosho.
Daily Movers – Select Tokyo Stock Exchange Listed Companies
Top Japanese Listed Companies
The Tokyo Stock Exchange is home to a diverse range of companies, with over 3,900 listed firms in mid 2024 across the various segments. This number can change from time to time, as new firms IPO, and others may delist.
Whilst there are many companies listed, certain stocks get more attention than others. We have highlighted a selection of the top Japanese listed stocks below, but there are many more besides. Depending on your investing or trading goals, there will be certain sectors or trends that might appeal to you more than others.
| Company | Market Cap Q4 24 |
|---|---|
| Keyence | $102.71 Billion |
| Softbank | $83.93 Billion |
| Mitsubishi Corp | $73 Billion |
| Honda Motor | $47.75 Billion |
| HOYA | $45.38 Billion |
| Toyota Motor Corporation | $226 Billion |
| Bridgestone | $27.33 Billion |
| Sony Group | $106 Billion |
| NEC | $23.24 Billion |
| Nintendo | $61 Billion |
Daily Movers – Indices
A Breakdown of The Tokyo Stock Exchange
The Tokyo Stock Exchange (TSE) was founded in 1878, making it one of the oldest stock exchanges in Asia. Initially, the TSE was created to provide a marketplace for the trading of government bonds and other securities as Japan was undergoing rapid modernisation during the Meiji Restoration. Over the years, the exchange expanded to include equities, bonds, and other financial instruments.
| Detail | |
|---|---|
| Foundation Year | 1878 |
| Market Capitalisation | Over $5 trillion USD (as of 2023) |
| Major Markets | Prime Market, Standard Market, Growth Market |
| Notable Milestones | Merger with Osaka Securities Exchange (2013), Introduction of the Prime Market (2022) |
The TSE grew significantly during Japan’s post-World War II economic boom, particularly during the 1950s to 1980s when Japan emerged as one of the world's largest economies. The exchange witnessed a massive rise in stock prices during the Japanese asset price bubble in the late 1980s, followed by a significant decline when the bubble burst in the early 1990s. Despite this, the TSE has remained a critical player in global finance and a gateway for investors looking to tap into Japan’s dynamic market.
In 2013, the Tokyo Stock Exchange merged with the Osaka Securities Exchange to form the Japan Exchange Group (JPX). This merger consolidated the two exchanges under one group, creating one of the largest and most comprehensive financial markets in the world. As part of this modernisation, the TSE transitioned to an electronic trading platform, improving efficiency and access for both domestic and international investors.
In 2022, the TSE introduced a new market segmentation structure, replacing its previous divisions with the Prime Market, Standard Market, and Growth Market. This restructuring was part of a broader effort to align the exchange with global standards, improve corporate governance, and create more transparency for investors.
Structure
The Tokyo Stock Exchange is organized into three key segments, each designed to cater to companies at different stages of development and with varying levels of market capitalization. This structure helps companies access capital while providing investors with diversified investment opportunities.
Prime Market – TSE’s premier listing segment, featuring the largest and most established companies in Japan. Companies listed on the Prime Market are required to meet stringent governance standards, financial criteria, and disclosure requirements. This market is aimed at investors seeking stable and liquid stocks from some of Japan’s top corporations.
Standard Market – Designed for mid-sized companies that may not yet meet the stringent requirements of the Prime Market but still demonstrate strong financial health and growth potential. The Standard Market allows companies to raise capital more easily and gain exposure to a wider investor base.
This market is ideal for investors who are looking for well-established companies but are open to moderate risk in exchange for higher potential returns.
Growth Market – Caters to small- and medium-sized enterprises (SMEs) and startups with high growth potential. These companies may not have the track record or stability of larger corporations, but they represent some of the most innovative and fast-growing businesses in Japan. Companies listed on this market are often involved in cutting-edge industries such as technology, biotechnology, and clean energy.
The Growth Market offers investors the opportunity to invest in early-stage companies that may deliver significant returns if they succeed, though it comes with higher risk due to the volatility often associated with smaller firms.
Major Sectors
Technology and Electronics – Japan is known for its innovation in technology and electronics, and the TSE is home to some of the world’s leading companies in this sector. Global giants like Sony, Panasonic, and Hitachi are key players in consumer electronics, industrial machinery, and digital entertainment. These companies are recognized for their technological advancements and strong global presence.
Automotive – The automotive industry is one of the cornerstones of Japan’s economy, and companies like Toyota, Honda, and Nissan are listed on the Tokyo Stock Exchange. These companies are known for their innovative vehicle designs, leadership in hybrid and electric vehicle technologies, and vast global distribution networks.
Financial Services – The financial services sector is another significant part of the TSE. Mitsubishi UFJ Financial Group (MUFG), Sumitomo Mitsui Financial Group (SMFG), and Nomura Holdings are among the largest financial institutions listed on the exchange. These banks and financial firms play a crucial role in Japan’s economy, offering a wide range of services from retail banking to investment banking.
Consumer Goods – Japan’s robust consumer goods sector is represented by companies like Shiseido (cosmetics), Uniqlo (Fast Retailing) (apparel), and Asahi Group Holdings (beverages). These companies have successfully expanded both domestically and internationally, capitalizing on Japan’s reputation for quality and innovation in consumer products.
Industrial and Manufacturing – Japan has a long history of industrial excellence, and the TSE lists several industrial powerhouses such as Mitsubishi Heavy Industries, Komatsu, and Kobe Steel. These companies are involved in infrastructure, machinery, robotics, and materials, contributing to Japan’s reputation as a global leader in manufacturing and industrial engineering.
Innovations
In recent years, the Tokyo Stock Exchange has introduced several reforms to improve corporate governance and transparency. These reforms are aimed at boosting investor confidence, particularly among international investors. Companies listed on the Prime Market are now required to have at least one independent director on their boards and to disclose detailed corporate governance reports.
The TSE attracts significant foreign investment, with international investors making up a large percentage of trading volume on the exchange. Moreover, several foreign companies have chosen to list on the Tokyo Stock Exchange to tap into the deep liquidity and investor base that Japan offers. The exchange’s alignment with global regulatory standards has made it more attractive for both foreign companies and international institutional investors.
The Tokyo Stock Exchange has embraced cutting-edge technology to improve trading efficiency. The introduction of arrowhead, an advanced electronic trading system, has increased trading speed and reduced latency, allowing for real-time trading and improving liquidity. The TSE also offers high-frequency trading (HFT) and other algorithmic trading systems that help drive market activity.
As Japan leads the way in renewable energy, robotics, and fintech, the TSE will continue to serve as a platform for some of the most innovative and future-oriented companies in the world. The exchange is also expected to expand its product offerings, including more derivatives, exchange-traded funds (ETFs), and sustainability-linked bonds to cater to the growing demand for diversified investment products.
