Sony no longer a top Japanese company?
Sony’s decline over these past few years has been tragic to watch. But the reduction in revenues, profits and returns to shareholders means that Sony will probably be kicked out of Japan’s newly-established JPX-Nikkei-400 market index. A decision will be made in August.
Meanwhile, Sony itself is hoping that World Cup mania will help shift tens of thousands of its high-end 4K/Ultra-HD TV sets, and that consumers will be persuaded by the huge amount of Sony cameras and other kit at the FIFA Brazilian venues. 300 of its cameras are in use, and some 20,000 Sony-branded retail stores will be showcasing its impressive Bravia 4K sets.
The sales results might help. Japan Exchange Group and Nikkei, which compile the new index, select component companies by measuring Returns On Equity (ROE), operating profits and market capitalisation, with weightings of 40, 40 and 20 per cent in that order. There are also qualitative measures on corporate governance, such as whether a company has outside board members, but these have a minor impact, with only up to 10 components affected.
The JPX-Nikkei-400 was established as an alternate to the more established Nikkei and Topix indexes and with government support to encourage more consumer participation, and investment. Its goal is to also encourage higher returns to investors. To datethe index has out-performed (at 3.4 per cent) both Topix (2.9 per cent) and the core Nikkei (1 per cent).