New stock index to showcase best of Japan Inc.

Japan will get a new stock index that aims to showcase the country's best firms, with officials looking to attract foreign investors back as interest wanes following a huge equity rally this year.

People walk past a share prices board in Tokyo, on November 1, 2013

The JPX-Nikkei Index 400, slated to start on January 6, will be composed of firms with high returns on equity and good corporate governance records, according to Tokyo Stock Exchange operator Japan Exchange Group and business publisher Nikkei.

Officials said the listed companies must have attributes long called for by foreign investors, including some independent outside directors and plans to adopt international financial reporting standards.

That means the index, which was announced on Wednesday, will be made up of giants including Toyota as well as start-ups and fast-growing firms such as mobile phone game maker GungHo Online Entertainment.

The new index will run alongside the Nikkei 225 and broader Topix index.

About 150 companies on the new 400-issue index are already listed on the Nikkei, with many others sitting on the Topix as well as on the Mothers and Jasdaq markets, which cover high-growth and emerging stocks.

Prime Minister Shinzo Abe's bid to kickstart Japan's economy has renewed interest in the country's stock markets as the yen weakens and the Bank of Japan embarks on a huge programme of monetary easing.

The weaker currency inflates exporters' profits when repatriated and makes their goods more competitive overseas, bringing rosy results for many firms as Japan's latest earnings season winds down.

The Nikkei soared about 80 percent at one stage thanks to a flood of foreign cash. While it has cooled in recent months, it is still up about 38 percent for the year.