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>Neither the company nor the employees have made sufficient investments, despite the fact that both sides see a gap between the skills they need and the reality.</li>
<li>Many companies either fail to link their management strategy to their human capital investment and human resource strategy, or don't have a clear policy for human capital investment.</li>
<li>If investment in human resources is curbed in order to maintain short-term profit margins, this will lead to weighing on growth potential and profit margins in the medium-to-long term.</li>
</ul>


Neither the company nor the employees have made sufficient investments, despite the fact that both sides see a gap between the skills they need and the reality.
Many companies either fail to link their management strategy to their human capital investment and human resource strategy, or don't have a clear policy for human capital investment.
If investment in human resources is curbed in order to maintain short-term profit margins, this will lead to weighing on growth potential and profit margins in the medium-to-long term.


Recognizing Human Resource Strategy as a Management Issue and Creating the Policy Is the First Step

Pan-Asia Index Rebalances/ Events/ Delta One, Periscope Analytics

Brian Freitas

Pan-Asia Index Rebalances/ Events/ Delta One

Periscope Analytics

Periscope Analytics focuses on event-driven trades across Asia Pacific and provides comprehensive, timely and systematic coverage of index changes to major Asia Pacific indices in a structured manner.

The analysis includes forecasted inclusions and exclusions to all major Asian indices that have significant amount of tracking assets, including estimates of passive buy/sell flow on the stocks. The service also provides commentary and impact of market consultations, ground rule changes, and other events (IPOs, spin-offs, M&A) that could lead to index changes and passive flow.

Periscope Analytics works with multi-strategy hedge funds, proprietary trading firms, stat arb trading groups and long-only investors that invest and trade in the Asia Pacific region with the data being used to trade index rebalances, avoid pre-positioning and passive flow, and to time entry into and exit from stocks.

Event-Driven Trades Across Asia Pacific

Event-Driven

<ul>
<li>At the October rebalance, there are 970 stocks that will have a lower FFW while 114 stocks will have a higher FFW. 493 stocks will undergo a Phased Weight Reduction.</li>
<li>Estimated one-way turnover is 2.54% resulting in a one-way trade of ¥1.815tn. 500 stocks have over 4 days ADV to trade, 100 stocks have over 9 days ADV to trade.</li>
<li>Setting the threshold at +/-US$50m to trade, the stocks with inflows have outperformed the stocks with outflows by 6.5% over the last four months.</li>
</ul>


At the October rebalance, there are 970 stocks that will have a lower FFW while 114 stocks will have a higher FFW. 493 stocks will undergo a Phased Weight Reduction.
Estimated one-way turnover is 2.54% resulting in a one-way trade of ¥1.815tn. 500 stocks have over 4 days ADV to trade, 100 stocks have over 9 days ADV to trade.
Setting the threshold at +/-US$50m to trade, the stocks with inflows have outperformed the stocks with outflows by 6.5% over the last four months.


TOPIX October Rebalance: BIG One With ¥1.8tn a Side to Trade

<ul>
<li>Companies had expected detailed rules, as with various disclosure documents, but was puzzled by government's guidelines, which were conceptual and didn't provide guidance on what to disclose and how much.</li>
<li>It is likely that the disclosure in annual securities reports, which are legal documents, will fill the space by disclosing items that are specifically identified and easy to show quantitatively.</li>
<li>Companies that cannot clearly explain their policies on investment in human capital and human resource strategies in their management strategies are unlikely to attract human resources.</li>
</ul>


Companies had expected detailed rules, as with various disclosure documents, but was puzzled by government's guidelines, which were conceptual and didn't provide guidance on what to disclose and how much.
It is likely that the disclosure in annual securities reports, which are legal documents, will fill the space by disclosing items that are specifically identified and easy to show quantitatively.
Companies that cannot clearly explain their policies on investment in human capital and human resource strategies in their management strategies are unlikely to attract human resources.


Companies Should Communicate Their Human Resources Strategy Rather than Detailed Disclosure Rules

<ul>
<li>Given the increased stock market volatility, it's not surprising that activist investment strategies are a good fit for investors seeking investment strategies that are less correlated with stock market fluctuations.</li>
<li>Japanese companies that have lower valuations, less effective steps to maximize their corporate value, and face many challenges in their governance practices are are well suited to activist investor approach.</li>
<li>Unlike passive investors who have an impact on the overall stock market, activist investors' purchases will have a limited impact on the overall market, but their presence will be significant.</li>
</ul>


Given the increased stock market volatility, it's not surprising that activist investment strategies are a good fit for investors seeking investment strategies that are less correlated with stock market fluctuations.
Japanese companies that have lower valuations, less effective steps to maximize their corporate value, and face many challenges in their governance practices are are well suited to activist investor approach.
Unlike passive investors who have an impact on the overall stock market, activist investors' purchases will have a limited impact on the overall market, but their presence will be significant.


Activist Investors Will Grow Their Presence, as Japanese Equities Would Be Good Fit for The Approach

Index Rebal Trades & Special Situations, Quiddity Advisors

Janaghan Jeyakumar, CFA

Index Rebal Trades & Special Situations

Quiddity Advisors

Pan-Asia Catalysts/Events

<ul>
<li>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.</li>
<li>This insight is a follow-up to <a href="https://www.smartkarma.com/insights/topix-inclusions-who-is-ready-aug-2022" target="_blank" data-smartkarma-citation="insights:74615" rel="noopener">TOPIX Inclusions: Who Is Ready (Aug 2022)</a> </li>
<li>At present, there are 53 names that satisfy all of these conditions and there are more names that are close to being in that group.</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.
This insight is a follow-up to TOPIX Inclusions: Who Is Ready (Aug 2022) 
At present, there are 53 names that satisfy all of these conditions and there are more names that are close to being in that group.


TOPIX Inclusions: Who Is Ready (Oct 2022)

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)

Recognizing Human Resource Strategy as a Management Issue and Creating the Policy Is the First Step

I would like to discussed the issues related to the human capital investment on the Nikkei article, "MHLW Formulates Guidelines for Relearning."

Metrical Inc

TOPIX October Rebalance: BIG One With ¥1.8tn a Side to Trade

Lower FFWs on 970 stocks and higher FFWs on 114 stocks will result in one-way turnover of 2.52% leading to a one-way trade of ¥1.8tn at the close...

Brian Freitas

Companies Should Communicate Their Human Resources Strategy Rather than Detailed Disclosure Rules

I would like to discuss the issues on the Nikkei article, "Human Capital Disclosure Guidelines Presented, but Companies Want Detailed Rules on...

Metrical Inc

Activist Investors Will Grow Their Presence, as Japanese Equities Would Be Good Fit for The Approach

I would like to discuss the points raised in the Nikkei article, "Autumn is the season for stock picking, and activists are flocking to small- and...

Metrical Inc

TOPIX Inclusions: Who Is Ready (Oct 2022)

Appier Group, ArtSpark Holdings, and Chubu Steel Plate are interesting TOPIX Inclusion Pre-event names that are worth tracking over the next few...

Janaghan Jeyakumar, CFA