The table below lists the Sector weightings of the Nikkei 225 stock index. The largest sector of the index is the Consumer Discretionary which makes up 20.38% of the index (Jan 1st, 2023). Industrial sector holds the second place, being almost as large as the Consumer Discretionary sector. It’s important to remember that Nikkei 225 is not market cap weighted which means that the index weightings do not fully represent the actual sector market values of the Japanese stock market as a whole. Note: Communications sector replaced Telecommunications sector in September 2018. Real Estate was part of the Financials sector before September 2016.
Nikkei 225 Index – GICS Sector Weightings
| GICS Sector | 12/31/2022 | 12/31/2021 | 12/31/2020 | 12/31/2019 | 12/31/2018 | 12/31/2017 | 12/31/2016 |
|---|---|---|---|---|---|---|---|
| Communications | 11.06% | 9.50% | 11.42% | 9.08% | 9.37% | - | - |
| Consumer Discretionary | 20.38% | 18.79% | 21.81% | 20.56% | 21.10% | 19.83% | 21.59% |
| Consumer Staples | 6.38% | 6.22% | 6.50% | 9.10% | 11.74% | 9.41% | 9.69% |
| Energy | 0.29% | 0.25% | 0.20% | 0.33% | 0.46% | 0.47% | 0.39% |
| Financials | 3.11% | 2.03% | 1.98% | 2.40% | 2.62% | 2.84% | 3.04% |
| Health Care | 13.12% | 12.20% | 14.44% | 13.05% | 11.36% | 9.55% | 9.51% |
| Industrials | 19.44% | 19.32% | 18.37% | 19.36% | 19.89% | 22.68% | 21.10% |
| Information Technology | 18.83% | 23.95% | 17.18% | 17.56% | 13.70% | 17.20% | 15.03% |
| Materials | 5.70% | 6.13% | 6.49% | 6.28% | 7.16% | 8.21% | 8.31% |
| Utilities | 1.53% | 0.13% | 0.15% | 0.19% | 0.25% | 0.21% | 0.28% |
| Real Estate | 0.16% | 1.47% | 1.47% | 2.08% | 2.35% | 2.30% | 2.55% |
| Telecommunications (discont.) | - | - | - | - | - | 7.30% | 8.50% |
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Nikkei 225 Stock Index – The benchmark for Japanese equity market
Nikkei 225 is the most followed index for the Japanese stock market. One very peculiar thing about the index is that it is price weighted rather than being market cap weighted. Unlike major U.S indices whose components are weighted based on their market value, Nikkei 225 assigns weights to its companies based on their stock price. This means that companies with a relatively few outstanding shares and therefore higher absolute share price have a large weightings no matter what their market cap is. For example the largest component, Fast Retailing Ltd, makes up 10.58% of the whole index (12/31/2022) and Toyota Motor Corp makes up just 1.19% despite being more than four times more valuable than Fast Retailing.