Small Tokyo-listed companies have capped the longest streak of daily advances in almost 37 years.
Japan’s TSE Second Section Price Index (TSE2), a capitalization- weighted index of smaller companies listed at the Tokyo Stock Exchange, added 0.2 percent to 2,308.56 at the 3 p.m. close today, rising for a 26th consecutive day. That’s the longest streak since May 13, 1975, said Takamichi Sugawara, an assistant manager in the information service division of the Tokyo Stock Exchange.
Even after rising for 26 days, shares on the index trade at an average of 0.68 times book value, compared with 1 times for the Topix Index, Japan’s broadest gauge, and 1.24 times for the Nikkei 225 Stock Average. A number less than one means that companies can be bought for less than value of their assets.
The streak “suggests money is flowing into the Japanese market across the board,” said Makoto Sengoku, a market analyst at Tokai Tokyo Securities Co. “The TSE’s second section is a market that’s very undervalued. That’s another reason behind investors buying the shares.”
Companies on the Tokyo bourse’s second section should have at least 800 shareholders and a market value of at least 2 billion yen ($25 million), bourse spokeswoman Yukari Hozumi said by telephone. For inclusion in the first section, where Toyota Motor Corp. and Canon Inc. are listed, companies are required to have at least 2,200 shareholders and market capitalization of 50 billion yen or more.
Nippon Seiki Co., which makes instrument panels for cars and boats, and Kabuki-za Co., which owns a traditional Japanese theater and runs restaurants, are the biggest companies on the Topix second section by market value.
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