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SoftBank Takes Top Spot on Topix From Toyota as Influence Grows

Pedestrians wearing protective masks walk past a SoftBank Corp. store in Tokyo, Japan, on Friday, Aug. 7, 2020. After reporting record losses in May and warning the coronavirus outbreak could be as devastating as the Great Depression, SoftBank Group founder Masayoshi Son is already poised to declare a recovery. Photographer: Toru Hanai/Bloomberg

Masayoshi Son has come to dominate Silicon Valley. Now his company is increasingly dominating Japan’s markets, with SoftBank Group Corp. rising to become the largest-weighted stock on the country’s Topix index.

SoftBank pulled ahead of Toyota Motor Corp. in pole position on the benchmark gauge last week, and sat as the highest weighting, albeit by a fraction, as of market close on Tuesday. That’s ended an almost 13-year streak for the automaker as the largest stock on the index, according to data compiled by Bloomberg.
SoftBank Group overtakes Toyota as top weight in Topix

The change is further evidence of SoftBank’s own winning run. While Toyota trades little changed in 2021, SoftBank stock is up nearly 30%, rallying past a two-decade record to a new high, backed by a surging stock market which has lifted the value of its portfolio companies.

Masayoshi Son Just Pushed SoftBank Shares Past Dot-Com Peak

Toyota, meanwhile, has been impacted by production outages due to earthquakes in Japan and freezing temperatures in the U.S., concerns over the global semiconductor shortage, and fears it’s losing out in the red-hot electric vehicle market.

“Changing times demand different companies,” said Keiichi Ito, chief quants analyst at SMBC Nikko Securities.

Changing Times

Another reason for SoftBank’s dominance is the makeup of the Topix. The index is weighted by market value, where Toyota still dominates. But that value is adjusted by a “free-float weight ratio,” based on the number of shares actually available to be traded in the market. The opaque measurement ignores stock that’s locked up by major shareholders, treasury stock or cross-shareholdings held by units or firms with business dealings.

A recent review in January trimmed Toyota’s ratio to 50% from more than 55%, with Ito noting that Toyota is impacted by its vast series of cross-shareholdings. SoftBank has a ratio of 60%.

SoftBank’s dominance in Japan’s markets is becoming more pronounced. It’s the second-largest weighting on the Nikkei 225 Stock Average after Fast Retailing Co., as well as the second most valuable company in the country by market value.

With Toyota having lost its crown as the world’s most valuable automaker to Tesla Inc. last summer, it may soon discover that SoftBank also outranks it in Japan too. While SoftBank’s market value trails Toyota’s 25.9 trillion yen valuation by around 4 trillion yen, that gap has narrowed by more than two-thirds in the past year.


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