Head of Research and Global Chief Strategist, Steno Research

Andreas Steno

Head of Research and Global Chief Strategist

Macro and Geopolitical Research House

Steno Research

Steno Research is a new macro and geopolitical research house. We are based out of Copenhagen, Denmark, but have an international team and a strong network of sources and partners around the world. The team is lead by Andreas Steno, previous global head of strategy at Nordea Bank, and Mikkel Rosenvold, former chief consultant in the Danish Ministry of Finance.

Cross Asset Strategy

<ul><li>Happy Sunday and welcome to our flagship editorial! What a week.</li><li>The BoJ no longer has a firm guidance towards higher 10yr bond yields, the Fed accepted higher long bond yields as an excuse to pause and economic data has been abysmal.</li><li>That cocktail has so far allowed the everything rally to thrive in a way we haven’t seen in quarters, but the feedback loop introduced by the big central banks may limit the scope of the bear market rally.</li></ul>

Happy Sunday and welcome to our flagship editorial! What a week.The BoJ no longer has a firm guidance towards higher 10yr bond yields, the Fed accepted higher long bond yields as an excuse to pause and economic data has been abysmal.That cocktail has so far allowed the everything rally to thrive in a way we haven’t seen in quarters, but the feedback loop introduced by the big central banks may limit the scope of the bear market rally.

Steno Signals #72 – When a Recession Meets a Melt-Up in Equities and Bonds

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>The average P/B has remained flat since March end, when TSE requested improvements for companies with P/Bs below 1x, and TOPIX has risen in line with the rise in BPS.</li>
<li>Given the lack of progress in improving ROE, companies have many issues to resolve in improving returns through the appropriate allocation of cash and capital.</li>
<li>Since it's no longer possible to show early results simply by leaving it to managers, the use of TOB/MBO will be a shortcut to raising shareholder returns and corporate value.</li>
</ul>


The average P/B has remained flat since March end, when TSE requested improvements for companies with P/Bs below 1x, and TOPIX has risen in line with the rise in BPS.
Given the lack of progress in improving ROE, companies have many issues to resolve in improving returns through the appropriate allocation of cash and capital.
Since it's no longer possible to show early results simply by leaving it to managers, the use of TOB/MBO will be a shortcut to raising shareholder returns and corporate value.


Valuations Will Rise when the Management Changes To "Maximizing Shareholder Interest"

Technical Analyst, Vermilion Research

Joe Jasper

Technical Analyst

Technical and Quantitative Research

Vermilion Research

Vermilion’s objective is to deliver timely, actionable, and unique technical research to professional investors through the application of our various technical indicators.

Our research strategists seek to highlight securities which we believe are at major inflection points, based on our various technical and quantitative indicators, and offer asymmetric risk/return profiles. Our unique research methodology, centered on relative strength, enables our strategists to deliver superior investment recommendations.

Our process begins by organizing the universe of actively traded stocks into discrete sectors, then into industry groups. We then apply our technical and quantitative tools to identify developing price trends. Once attractive trends are identified within a selected sector or group, we screen for individual stocks which we believe offer the best risk/reward profile. We provide a historical perspective that often reveals, through our long-term charts, how price patterns often repeat themselves over time.

Technical Analysis

TSE Tokyo Price Index TOPIX / Technical Analysis

<ul>
<li>The MSCI ACWI index ACWI-US briefly fell below major support at $90.50-$91.50, though we do not consider it a "decisive" breakdown and we now see a false breakdown (bullish).</li>
<li>On MSCI ACWI (local currency), a false breakdown appears to already be in place, which is bullish as long as the index does not break to a new low.</li>
<li>MSCI EM (EEM-US) continues to hold above $36.50-$37 support, while MSCI ACWI ex-US (ACWX-US) and EAFE (EFA-US) remain above supports at $45 and $65-$66, respectively. Pullback is likely over.</li>
</ul>


The MSCI ACWI index ACWI-US briefly fell below major support at $90.50-$91.50, though we do not consider it a "decisive" breakdown and we now see a false breakdown (bullish).
On MSCI ACWI (local currency), a false breakdown appears to already be in place, which is bullish as long as the index does not break to a new low.
MSCI EM (EEM-US) continues to hold above $36.50-$37 support, while MSCI ACWI ex-US (ACWX-US) and EAFE (EFA-US) remain above supports at $45 and $65-$66, respectively. Pullback is likely over.


Japan Bullishly Inflecting; Constructive Outlook Intact; Global Pullback Likely Over

<ul>
<li>It should be noted that some companies that state that they do not possess takeover defenses also indicate that they will take "appropriate measures."</li>
<li>Addition of ROE and % of independent directors to the approval/disapproval of takeover defense agenda is likely an afterthought to add these conditions to favor the introduction of takeover defense.</li>
<li>It’ll take several years before life insurance companies show signs of change in voting. It’ll be interesting to see how they come to terms with their corporate clients and stewardship.</li>
</ul>


It should be noted that some companies that state that they do not possess takeover defenses also indicate that they will take "appropriate measures."
Addition of ROE and % of independent directors to the approval/disapproval of takeover defense agenda is likely an afterthought to add these conditions to favor the introduction of takeover defense.
It’ll take several years before life insurance companies show signs of change in voting. It’ll be interesting to see how they come to terms with their corporate clients and stewardship.


What Is the Path for Resolving the Challenges of Life Insurance Companies' Policy Shareholdings?

<ul>
<li>439 companies that will be excluded from TOPIX aren’t expected to face further selling pressure, but 43 companies that remain in TOPIX may have a positive impact in the future.</li>
<li>Only 43 companies (8.9%) succeeded in exceeding 10 billion yen in tradable market capitalization; compared to 22.3% rise in TOPIX, the stock performance of the TOPIX exclusion candidates were lackluster.</li>
<li>These companies with small market capitalizations represent a challenge that has made it difficult for them to attract investor attention and to come up with convincing disclosures.</li>
</ul>


439 companies that will be excluded from TOPIX aren’t expected to face further selling pressure, but 43 companies that remain in TOPIX may have a positive impact in the future.
Only 43 companies (8.9%) succeeded in exceeding 10 billion yen in tradable market capitalization; compared to 22.3% rise in TOPIX, the stock performance of the TOPIX exclusion candidates were lackluster.
These companies with small market capitalizations represent a challenge that has made it difficult for them to attract investor attention and to come up with convincing disclosures.


Fewer TOPIX Remaining Companies Show the Difficulty of Producing Convincing Disclosures

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)

Steno Signals #72 – When a Recession Meets a Melt-Up in Equities and Bonds

The BoJ no longer has a firm guidance towards higher 10yr bond yields, the Fed accepted higher long bond yields as an excuse to pause and economic...

Steno Research

Valuations Will Rise when the Management Changes To "Maximizing Shareholder Interest"

I would like to discuss the issues on the October 5 Nikkei Shimbun article, "TOBs Increase for First Time in 14 Years; Omron, Others Increase...

Metrical Inc

Japan Bullishly Inflecting; Constructive Outlook Intact; Global Pullback Likely Over

The MSCI $ACWI briefly fell below our $90.50 support but quickly reclaimed, suggesting a false breakdown and the likely end to this pullback in...

Vermilion Research

What Is the Path for Resolving the Challenges of Life Insurance Companies' Policy Shareholdings?

I would like to discuss the issues on the October 3 Nikkei Shimbun article, "Changing 'Silent Life Insurers': Dai-ichi and Sumitomo Strictly...

Metrical Inc

Fewer TOPIX Remaining Companies Show the Difficulty of Producing Convincing Disclosures

I would like to discuss the issues on the October 6 Nikkei newspaper article, "439 Companies to be Excluded from TOPIX by the End of January 2025."

Metrical Inc

Steno Signals #72 – When a Recession Meets a Melt-Up in Equities and Bonds

The BoJ no longer has a firm guidance towards higher 10yr bond yields, the Fed accepted higher long bond yields as an excuse to pause and economic...

Steno Research

Valuations Will Rise when the Management Changes To "Maximizing Shareholder Interest"

I would like to discuss the issues on the October 5 Nikkei Shimbun article, "TOBs Increase for First Time in 14 Years; Omron, Others Increase...

Metrical Inc

Japan Bullishly Inflecting; Constructive Outlook Intact; Global Pullback Likely Over

​The MSCI $ACWI briefly fell below our $90.50 support but quickly reclaimed, suggesting a false breakdown and the likely end to this pullback in...

Vermilion Research

What Is the Path for Resolving the Challenges of Life Insurance Companies' Policy Shareholdings?

I would like to discuss the issues on the October 3 Nikkei Shimbun article, "Changing 'Silent Life Insurers': Dai-ichi and Sumitomo Strictly...

Metrical Inc

Fewer TOPIX Remaining Companies Show the Difficulty of Producing Convincing Disclosures

I would like to discuss the issues on the October 6 Nikkei newspaper article, "439 Companies to be Excluded from TOPIX by the End of January 2025."

Metrical Inc

The MSCI $ACWI briefly fell below our $90.50 support but quickly reclaimed, suggesting a false breakdown and the likely end to this pullback in...