(Bloomberg) — Japan’s largest exchange operator is set to disclose the components of three new market sections on Tuesday, but the long-awaited shake-up of the country’s sluggish stock market is attracting more skepticism than excitement.

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Japan Exchange Group Inc. will unveil members of its new “Prime” section of the Tokyo Stock Exchange, which will replace the current First Section of companies that form the benchmark Topix index. But the shift is disappointing analysts who view it as little more than window-dressing: the new Prime section will initially include between 1,800 and 1,900 members, according to an analysis by Nikkei, down less than a fifth from the existing 2,185 constituents.

The bloated bench of constituents in the First Section was a key reason behind the move, which had been heralded as a once-in-a-generation reform. But it’s now got some asking whether the revamp, which goes into effect April 4, has been worth the fuss.

“I am not sure what the point was,” said Travis Lundy, an analyst at Quiddity Advisors who publishes on Smartkarma. “It will not meaningfully alter anything.”

Bloated Index

Japan’s overblown Topix, whose membership has nearly doubled since the 1990s to include more than half of the nation’s listed firms, has been cited among reasons for its long underperformance. Many of the components are obscure small caps with little-to-no liquidity and offer minimal or no English-language disclosure.

The Tokyo Stock Exchange has pitched Prime as a market for companies “which center their business on constructive dialogue with global investors,” with improved corporate governance among the stated goals.

“I don’t see anything drastically changing when the main market stock goes from 2,200 firms to 1,800,” said SMBC Nikko Securities Inc. Chief Quants Analyst Keiichi Ito. “Changing the market classification will not change corporate behavior.”

Tokyo’s Promise of Generational Stock Revamp Draws Skeptics

One of the reasons so little has changed is what the TSE refers to as a “transitional” measure that allows companies that don’t meet Prime’s already loose listing standards to stay on by pledging to meet the criteria at some point in the future.

* Based on analysis by Nikkei

The firms in the “Growth” section, which will replace the Mothers and Jasdaq markets, as well as the “Standard” section will also be announced Tuesday. The Topix will remain, but the components will be tweaked in stages over several years.

Coasting

Being on the TSE First Section carries cachet in Japan and viewed as similar to being listed as a Fortune 500 company. That’s prompted some companies to strategize how to best position themselves.

Among those firms are e-commerce firm Market Enterprise Co., which has a market value of just over $32 million, and Cominix Co., a machinery maker that booked $2.5 million in profit last year, both of which have applied for Prime.

The potential inclusion of relative minnows has prompted criticism that the revamp plans are too watered down to matter. The TSE has countered by saying that the initial reform was merely a “first step”. And SMBC Nikko’s Ito noted in a report last month that it will be harder for firms to “coast along” than before.

Threat of Demotion Spurs Japan Firms to Shake Up Stock Register

Still, investors will likely shrug off Tuesday’s announcement as a procedural instead of fundamental change.

Until authorities “stop paying lip service to the reforms, we are unfortunately just shuffling paper,” said Justin Tang, head of Asian research at United First Partners.

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