Sharp Removed From Nikkei 225 as Yamaha Motor Added

  • Changes are from Aug. 1 as Sharp moves to TSE second section
  • Passive funds will need to add to holdings of Yamaha Motor

Yamaha Motor Co., the Japanese maker of motorcycles and boat engines, will replace Sharp Corp. on the Nikkei 225 Stock Average as the troubled consumer-electronics company is moved from the Tokyo bourse’s main stock board.

The change takes place on Aug. 1 when Sharp is reassigned to the exchange’s second section after it announced earlier this year that liabilities exceeded assets. Sharp, which agreed to sell a majority stake to Foxconn Technology Group, will be removed from the Nikkei 225 and the Nikkei Stock Index 300 on that date, Nikkei Inc. said in a statement. 

The change will force passive funds to rebalance their holdings at the close of the market on July 29, according to SMBC Securities Inc. Adjustments by the funds would probably result in 6.4 days of buying impact on Yamaha Motor’s shares, SMBC Nikko quants led by Keiichi Ito wrote in a report dated June 28. Yamaha Motor was named in the report as a possible replacement for Sharp.

“A sad day -- a legend goes,” Andrew Clarke, Hong Kong-based director of trading at Mirabaud Asia Ltd., said of Sharp’s departure. Still, “there’s no surprises. The only surprise is that it took so long.”

Sharp Struggles

Sharp, which has seen its market value fall to $1.8 billion, has dropped 39 percent from the year’s high in February. The company’s struggle with deteriorating demand for its consumer electronics and displays has resulted in more than $12 billion in net losses over the past five years and raised doubts about its ability to survive as a going concern.

Foxconn Chairman Terry Gou, who has built a fortune assembling devices for others including Apple Inc., spent four years chasing the Japanese company before winning control with a $3.5 billion deal in March.

Yamaha Motor was established in 1955 in Shizuoka, Japan, when it split from Yamaha Corp., the maker of musical instruments.

Changes to Nikkei 225 constituents are considered once a year at the beginning of October. Reviews are also carried out as needed when a stock is set to be removed from the measure for reasons such as delisting or transfer to the second section.

(Corrects spelling of Yamaha in headline.)
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