One Japan Stock Index Bucks Poor Returns With 30% Gain This Year

(Bloomberg) -- Japanese equities may be the worst performers in the developed world this year, but one corner of the market is bucking that trend.

A measure of key stocks from the Tokyo Stock Exchange’s Mothers Index for startup companies has surged 30% in 2019, far outpacing the 6.4% gain in the benchmark Topix gauge.

The TSE Mothers Core Index, as it’s called, picks 15 companies from the broader 283-member Mothers measure. They’re selected on criteria such as market capitalization, trading value, profit and dividends, according to index compiler Japan Exchange Group Inc.

“The Tokyo Stock Exchange Mothers Core Index is comprised of the leading common domestic stocks listed on TSE Mothers,” Japan Exchange said in a description on its website.

The Simplex TSE Mothers Core ETF, which tracks the index, is one of the best-performing Japan-focused equity funds this year, according to data compiled by Bloomberg.

Performance has been driven by a biotech stock, Sosei Group Corp., whose shares have soared 188% in 2019. Sosei accounted for about 11% of the ETF’s assets at the end of January.

Other contributors include Rakus Co., a cloud-service provider whose shares have risen almost 60% this year, and Baycurrent Consulting Inc., a business-strategy and information-technology consultant that’s up 80%.

The ETF has surged even though it counted Mixi Inc. as its biggest holding at the end of January, making up 37% of assets. The social-network and smartphone-game operator is down 4% this year.

But a word of warning: this is a volatile index. It lost almost half its value in 2018.

To contact the reporter on this story: Tom Redmond in Singapore at tredmond3@bloomberg.net

To contact the editors responsible for this story: Divya Balji at dbalji1@bloomberg.net, Teo Chian Wei, Min Jeong Lee

©2019 Bloomberg L.P.