Index Rebal Trades & Special Situations, Quiddity Advisors

Janaghan Jeyakumar, CFA

Index Rebal Trades & Special Situations

Quiddity Advisors

Pan-Asia Catalysts/Events

Event-Driven

<ul>
<li>Quiddity's "<strong>Who is Ready</strong>" series of insights aims to objectively identify names listed on the Tokyo Stock Exchange that are potential additions to the TOPIX Index in future.</li>
<li>There were no Section Transfers announced in the last 3 months so currently there are no live TOPIX Inclusion events at present.</li>
<li>There are currently 79 names capable of satisfying all the key section transfer requirements. Our long-term pre-event candidate <a href="https://www.smartkarma.com/entities/celsys-inc" target="_blank" data-smartkarma-citation="entities:20774:1" rel="noopener">CELSYS (3663 JP)</a> is one of them.</li>
</ul>


Quiddity's "Who is Ready" series of insights aims to objectively identify names listed on the Tokyo Stock Exchange that are potential additions to the TOPIX Index in future.
There were no Section Transfers announced in the last 3 months so currently there are no live TOPIX Inclusion events at present.
There are currently 79 names capable of satisfying all the key section transfer requirements. Our long-term pre-event candidate CELSYS (3663 JP) is one of them.


TOPIX Inclusions: Who Is Ready (Apr 2024)

Asia L/S Equity PM/Macro/Thematic Idea Generation

Rikki Malik

Cross Asset Strategy

<ul>
<li>A monthly review at how the markets and our themes are currently performing</li>
<li>Analysing what went wrong and what went right in stocks and sectors</li>
<li>Highlighting positions added or removed from the thematic investment portfolio</li>
</ul>


A monthly review at how the markets and our themes are currently performing
Analysing what went wrong and what went right in stocks and sectors
Highlighting positions added or removed from the thematic investment portfolio


March Themes and Thematic Portfolio Review

Executive Director, Metrical Inc

Aki Matsumoto

Executive Director

Independent Leading Corporate Governance Research

Metrical Inc

METRICAL INC. is an independent leading Corporate Governance research firm in Japan where Corporate Governance is increasingly recognized as an important element on corporate management in these days. Thus, CG research and solutions would become an essential component of global capital markets and play important to contribute to transparency of the markets and maximize shareholders’ value in Japan. 

METRICAL INC. provides Corporate Governance research and analysis including rating services, and  also offers investment research and IR services with solutions and customized profound research on CG and IR issues.

<ul>
<li>Market structure is the main factor hindering trading liquidity. In addition to the cross-holdings that remain, ETFs held by the Bank of Japan cast a shadow over trading liquidity.</li>
<li>Companies are key on this issue. In addition to accelerating to reducte cross-shareholdings, English-language disclosure of annual securities reports, which are in high demand by long-term investors, should be promoted.</li>
<li>If long-term overseas investors get serious about investing in Japanese equities, the increase in trading liquidity in Japanese equities will be sustainable, and broker coverage will naturally expand.</li>
</ul>


Market structure is the main factor hindering trading liquidity. In addition to the cross-holdings that remain, ETFs held by the Bank of Japan cast a shadow over trading liquidity.
Companies are key on this issue. In addition to accelerating to reducte cross-shareholdings, English-language disclosure of annual securities reports, which are in high demand by long-term investors, should be promoted.
If long-term overseas investors get serious about investing in Japanese equities, the increase in trading liquidity in Japanese equities will be sustainable, and broker coverage will naturally expand.


Solving the Issue of Increasing Trading Liquidity in Japanese Stocks Is More Than Analyst Coverage..

Pan-Asia Catalysts/Events, Quiddity Advisors

Travis Lundy

TSE Tokyo Price Index TOPIX / Event-Driven

<ul>
<li>In mid-January, the TSE announced a "name-and-shame" list where they listed all the companies which had put forth a disclosure about 【資本コストや株価を意識した経営の実現に向けた対応】. But they did not actually shame.</li>
<li>The list shows which companies have disclosed a policy/consideration. But no data/links. We have the links, and we are weeks ahead of the TSE. Working to get months ahead.</li>
<li>We created a tool to name <em>everyone</em>, show their reports, provide links, and now a new tool. Put in a name, see the difference between the Old/New Reports.</li>
</ul>


In mid-January, the TSE announced a "name-and-shame" list where they listed all the companies which had put forth a disclosure about 【資本コストや株価を意識した経営の実現に向けた対応】. But they did not actually shame.
The list shows which companies have disclosed a policy/consideration. But no data/links. We have the links, and we are weeks ahead of the TSE. Working to get months ahead.
We created a tool to name everyone, show their reports, provide links, and now a new tool. Put in a name, see the difference between the Old/New Reports.


Updated Tool (31Mar24) & "Diff File Generator" For TSE "Mgmt Conscious of Capital Cost/Stock Price"

<ul>
<li>Characteristic of companies TSE introduced as good disclosure examples is that they include more companies with a high foreign ownership and those that pay relatively close attention to cash allocation.</li>
<li>Not all companies that are good examples have increased their valuations noticeably compared to before TSE market restructuring, but TSE has chosen them based on the content of their initiatives.</li>
<li>These companies didn't create their cash allocation policies abruptly, but had more opportunities to think through cost of capital, return on capital and stock price through engagements with overseas investors.</li>
</ul>


Characteristic of companies TSE introduced as good disclosure examples is that they include more companies with a high foreign ownership and those that pay relatively close attention to cash allocation.
Not all companies that are good examples have increased their valuations noticeably compared to before TSE market restructuring, but TSE has chosen them based on the content of their initiatives.
These companies didn't create their cash allocation policies abruptly, but had more opportunities to think through cost of capital, return on capital and stock price through engagements with overseas investors.


The Good Case Companies Had More Opportunities to Reflect on Cost of Capital and Return on Capital

Japan

The TOPIX, also known as the Tokyo Stock Price Index, is a capitalization-weighted index of all companies listed on the First Section of the Tokyo Stock Exchange. The index is supplemented by the subindices of the 33 industry sectors. The index calculation excludes temporary issues and preferred stocks, and has a base value of 100 as of January 4, 1968.

TSE Tokyo Price Index TOPIX (TPX INDEX)

TOPIX Inclusions: Who Is Ready (Apr 2024)

There are currently 79 names that satisfy all 6 key Segment Transfer requirements based on current data. Another 84 names can satisfy 5 out of 6...

Janaghan Jeyakumar, CFA

March Themes and Thematic Portfolio Review

We review overall market performance, our investment themes, highlighting additions and substractions in the thematic portfolio

Rikki Malik

Solving the Issue of Increasing Trading Liquidity in Japanese Stocks Is More Than Analyst Coverage..

I would like to discuss the issues on the February 11 Nikkei Shimbun article, "Investment in Japanese Stocks 'A Barrier to Investment': 30% of...

Metrical Inc

Updated Tool (31Mar24) & "Diff File Generator" For TSE "Mgmt Conscious of Capital Cost/Stock Price"

The Quiddity Tool for "Policy to implement management that is conscious of cost of capital and stock price" is updated. We have links to all the...

Travis Lundy

The Good Case Companies Had More Opportunities to Reflect on Cost of Capital and Return on Capital

I would like to discuss the document "Publication of Key Points and Examples of "Management Conscious of Cost of Capital and Stock Price" Based on...

Metrical Inc