Similar to the S&P 500, Japan's Topix stock price index has a high degree of concentration and is moving at a high price.

The S&P 500 (SP500) (SPY) (VOO) is not the only stock index in the world that is soaring by top heavy.

Apollo Global Management pointed out on Wednesday that Japan's TOPIX, which targets 2,100 or more corporate brands, is occupied by the top 30 stocks. The largest stocks, including Toyota Motor Corporation (TM) and Mitsubishi UFJ Financial Group (MUFG), currently account for 40% of the index.

Apollo chief economist Thorsten Throck stated in his blog that “concentration is also a major issue for the Japanese stock market.” S&P 500 (SP500) (IVV) stock price concentration is an important market scenario, and megacap high-tech stocks, including NVDA (NVDA) and Meta (META), led most of the +15% rise in the index, which hit an all-time high in 2024.

According to what Morgan Stanley (MS) announced last month, price increases in the so-called Magnificent Seven stock group last year accounted for more than half of the +26% increase in the S&P 500 (SP500). Also, MS announced that the concentration of the US stock market, which shows the weight of the top 10 stocks, has almost doubled from 14% to 27% in the 10 years up to 2023.

Meanwhile, TOPIX hit an all-time high this year, and has risen approximately 21% since the beginning of the year. Japanese export companies have been helped by the yen exchange rate falling +12% against the US dollar (JPY: USD) (USD: JPY). The interest rate difference between Japanese government bonds and US government bonds has been a major force leading the Japanese currency to a 10-year low.

Japan's Nikkei Stock Average (NKY: IND) also hit an all-time high, rising 22% year to date. According to Goldman Sachs strategists, the transition to an inflationary economy and corporate governance reforms are two important structural changes in the Japanese stock market.

Let's introduce TOPIX's top 10 brands and weights:

Toyota Motor Corporation (TM) - Weight: 4.77

Mitsubishi UFJ Financial Group (MUFG) - Weight: 2.54

Sony (SONY) - Weight: 2.31

Hitachi, Ltd. (OTCPK:HTHIY) - Weight: 2.00

Tokyo Electron (OTCPK: TOELY) - Weight: 1.82

Sumitomo Mitsui Financial Group (SMFG) - Weight: 1.81

KEYENCE (OTCPK:KYCCF) - Weight: 1.80

Mitsubishi Corporation (OTCPK: MSBHF) - Weight: 1.72

Mitsui & Co. (OTCPK: MITSY) - Weight: 1.61

Recruit Holdings (OTCPK: RCRRF) - Weight: 1.50