Nikkei 225 to cap Fast Retailing share weight in index calculation

TOKYO -- Nikkei will apply a capping ratio to the Fast Retailing share price used to calculate the Nikkei Stock Average, or Nikkei 225, as the weight of the owner of apparel brand Uniqlo exceeded the preset weight cap of 10%, the index provider said Wednesday.

The weight of Fast Retailing reached 10.4% as of July 31, triggering the cap, starting Oct. 1. In the calculation of the Nikkei 225, the index provider uses the share price and a price-adjustment factor for all component issues. The new price-adjustment factor for Fast Retailing will be 2.7, down from the current three.

Nikkei introduced the capping rule in July 2022 to prevent the ratio of certain stocks from becoming excessively high. The rule states that if the weight of a constituent exceeds 10% on the final trading day in July or January, the capping ratio is applied to the constituent issue, either in October or April, when Nikkei conducts periodic reviews. Fast Retailing will be the first case where the index provider applies the new rule.

For details, please visit the Nikkei indexes website.