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>As for "liquidity," one of the problems of TSE market restructuring, if the selection criteria for TOPIX components are raised, fewer companies will be forced to cling to prime market.</li>
<li>Regarding "engagement" challenge, a solution is reducing the number of TOPIX components, since low fees and many portfolio companies of passive funds prevent investment managers from devoting resources to engagements.</li>
<li>Regarding "sustainable growth" challenge, inflation would be a catalyst for learning from history, where an environment that forced all companies to change caused a change in the mindset of managers.</li>
</ul>


As for "liquidity," one of the problems of TSE market restructuring, if the selection criteria for TOPIX components are raised, fewer companies will be forced to cling to prime market.
Regarding "engagement" challenge, a solution is reducing the number of TOPIX components, since low fees and many portfolio companies of passive funds prevent investment managers from devoting resources to engagements.
Regarding "sustainable growth" challenge, inflation would be a catalyst for learning from history, where an environment that forced all companies to change caused a change in the mindset of managers.


To Make the TSE Prime Market in Line with the Original Concept of the Market

<ul>
<li>Although many companies now disclose numerical targets in their mid-term management plans, only a few still use ROE or ROIC as numerical targets(15% 1,801 companies of Metrical Universe, March 2023).</li>
<li>The fact that many companies that don't include ROE or ROIC as KPIs indicates that the management wasn't aware of the return  from the shareholders' perspective or cost of capital.</li>
<li>The 3-year mid-term business plan is built on the foundation of the actual project in progress and should be outlined to reflect its cash allocations and cash flow returns.</li>
</ul>


Although many companies now disclose numerical targets in their mid-term management plans, only a few still use ROE or ROIC as numerical targets(15% 1,801 companies of Metrical Universe, March 2023).
The fact that many companies that don't include ROE or ROIC as KPIs indicates that the management wasn't aware of the return  from the shareholders' perspective or cost of capital.
The 3-year mid-term business plan is built on the foundation of the actual project in progress and should be outlined to reflect its cash allocations and cash flow returns.


Few Companies Include ROE and ROIC as KPIs in Their Mid-Term Management Plans

<ul>
<li>The rapid spread of companies, especially large companies, disclosing the skills matrix was triggered by Supplemental Principle 4-11-(i), which was added to the Corporate Governance Code.</li>
<li>While more companies focus disclosure on skills matrix of directors, it’s questionable whether these criteria have been validated to select those who can help expand the value of the company.</li>
<li>The process should ensure that the nomination process is based on the skills needed to run the company, not on who is close to the president of the company.</li>
</ul>


The rapid spread of companies, especially large companies, disclosing the skills matrix was triggered by Supplemental Principle 4-11-(i), which was added to the Corporate Governance Code.
While more companies focus disclosure on skills matrix of directors, it’s questionable whether these criteria have been validated to select those who can help expand the value of the company.
The process should ensure that the nomination process is based on the skills needed to run the company, not on who is close to the president of the company.


The Reasons for the Criteria Selected for the Directors' Skills Matrix Are Still Unclear

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

iShares MSCI ACWI ETF / Technical Analysis

<ul>
<li>Our 2023 outlook, initially discussed in our January 6th 2023 Int'l Compass, was for $93 to cap upside on the MSCI ACWI (ACWI-US); this has again proven prescient.</li>
<li>Since late-January/early-February we have recommended shifting to defensives, and MSCI ACWI defensive Sectors including Health Care (IXJ-US), Utilities (JXI-US), and Consumer Staples (KXI-US) are now hitting 3-4-month RS highs.</li>
<li>With the ACWI-US just now starting to turn down after testing $93, we continue to recommend a tactical overweight to the aforementioned defensive Sectors, and also to gold miners (GDX-US).</li>
</ul>


Our 2023 outlook, initially discussed in our January 6th 2023 Int'l Compass, was for $93 to cap upside on the MSCI ACWI (ACWI-US); this has again proven prescient.
Since late-January/early-February we have recommended shifting to defensives, and MSCI ACWI defensive Sectors including Health Care (IXJ-US), Utilities (JXI-US), and Consumer Staples (KXI-US) are now hitting 3-4-month RS highs.
With the ACWI-US just now starting to turn down after testing $93, we continue to recommend a tactical overweight to the aforementioned defensive Sectors, and also to gold miners (GDX-US).


Stay Tactically Overweight Defensives; Remain Overweight Europe, Japan, & EAFE. Buys in Defensives

<ul>
<li>This year, 26.4% of companies will hold AGMs on June 29. The trend will continue, with 1/4 companies holding AGMs on the day before the last business day of June.</li>
<li>Electronic provision of shareholder meeting materials (3-4 weeks in advance) and electronic voting platforms for institutional investors progressed, mainly for prime market listed companies.</li>
<li>The mismatch between supply and demand continues, with only 26.9% of companies providing English translations of business reports (materials for AGMs), a much-needed service for global institutional investors.</li>
</ul>


This year, 26.4% of companies will hold AGMs on June 29. The trend will continue, with 1/4 companies holding AGMs on the day before the last business day of June.
Electronic provision of shareholder meeting materials (3-4 weeks in advance) and electronic voting platforms for institutional investors progressed, mainly for prime market listed companies.
The mismatch between supply and demand continues, with only 26.9% of companies providing English translations of business reports (materials for AGMs), a much-needed service for global institutional investors.


Even Though the June AGM Was Spread over 4 Days, 26.4% of the Companies Were Concentrated on June 29

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)

To Make the TSE Prime Market in Line with the Original Concept of the Market

I would like to discuss the issues on the April 3 Nikkei Shimbun article, "TSE Reforms: Improvement Requested for P/Bs Below 1x to Put Soul into...

Metrical Inc

Few Companies Include ROE and ROIC as KPIs in Their Mid-Term Management Plans

I would like to discuss the issues on the March 31 Nikkei article, "Activist Shareholders Call for Higher Stock Prices: Company's Mid-Term...

Metrical Inc

The Reasons for the Criteria Selected for the Directors' Skills Matrix Are Still Unclear

I would like to discuss the issues on the April 2 Nikkei article, "Disclosure of Directors' Skills Spreads to Major Listed Companies, but There Are...

Metrical Inc

Stay Tactically Overweight Defensives; Remain Overweight Europe, Japan, & EAFE. Buys in Defensives

$93 on $ACWI continues to be a key resistance that we have discussed since early-Jan as capping upside for 2023. Stick with defensives $IXJ $XLV...

Vermilion Research

Even Though the June AGM Was Spread over 4 Days, 26.4% of the Companies Were Concentrated on June 29

I would like to discuss the summary of the TSE's April 24 disclosure, "Trends in Annual General Meetings of Shareholders of Companies whose Fiscal...

Metrical Inc