Japan's new benchmark equity index, which focuses on company fundamentals and corporate governance, is gaining traction with derivatives traders as they embrace a range of over-the-counter strategies to generate delta one exposure and take advantage of new relative value opportunities. The JPX-Nikkei 400, which went live in January, sits at the centre of a third pillar of Prime Minister Shinzo Abe's package of economic reforms aimed at strengthening corporate governance and kick-starting the economy. Rather than focusing purely on market cap - as is the case with the Tokyo Stock Exchange's Topix index - or absolute stock levels as per the Nikkei 225, the index selects constituents for high return on equity and operating profit.
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