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Nikkei members rejigged
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April 17, 2000: 7:57 a.m. ET
Tokyo benchmark to receive 30 new tech members in first change since 1991
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LONDON (CNNfn) - A surprise reform of Japan's benchmark Nikkei 225 stock market index, adding shares including the country's largest company by market value, coincided with a sharp sell-off Monday in the technology shares that will join the index next week to replace "old economy" stocks.
However, there was a broad welcome for the changes, announced Sunday by the parent company of the influential Nihon Keizai Shimbun newspaper, which runs the index. The Nikkei's composition has not changed since October 1991 and has come under fire for failing to represent the broader Japanese economy because it excludes some of the country's largest-capitalization stocks.
Nihon Keizai Shimbun said 30 new stocks will join the Nikkei 225 on April 24, including NTT DoCoMo, the country's largest mobile phone operator and Japan's most valuable company. It will be joined by Kyocera Corp., another leading cellular operator.
The Nikkei 225's composition will from now on be reviewed annually in October, Nihon Keizai Shimbun said.
The other new faces include Seven-Eleven Japan, the convenience store chain whose stock has climbed sharply - and subsequently fallen - on plans to develop an online banking operation with two of Japan's largest banks. Matsushita Communication Industrial, which manufactures mobile phones, and Industrial Bank of Japan will also join the Nikkei, but leading Internet investors Softbank and Hikari Tsushin remain outside the benchmark index.
Among the stocks making way are Toyo Tyre & Rubber and metals firm Shimura Kako.
Supporters of the index revamp argue it will help speed up reform of the Japanese economy.
"Selling Old Japan (stocks) to buy New Japan (stocks) is necessary for the economy to put forward ongoing structural reforms, and the change in the Nikkei will encourage this," Tetsuya Ishijima, chief strategist at Okasan Securities, told Reuters.
However, others believe the changes will make the Nikkei more reflective of moves by overseas investors, with the state of the Japanese economy becoming less of an influence on the index as events on Wall Street assume a greater significance.
The Nikkei 225 closed down 7 percent at 19,008.64 Monday, its lowest level since Jan. 25, following record one-day declines for the Nasdaq composite and the Dow Jones industrial average in the U.S. on Friday. 
-- from staff and wire reports
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