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

Brian Freitas

Pan-Asia Index Rebalances/ Events/ Delta One

Index Rebalance

<ul>
<li>
<a href="https://www.smartkarma.com/entities/orix-corp" target="_blank" data-smartkarma-citation="entities:9936:1" rel="noopener">Orix Corp (8591)</a> replaces <a href="https://www.smartkarma.com/entities/shinsei-bank-ltd" target="_blank" data-smartkarma-citation="entities:16897:1" rel="noopener">Shinsei Bank (8303)</a> in the <a href="https://www.smartkarma.com/entities/nikkei-225" target="_blank" data-smartkarma-citation="entities:22909:1" rel="noopener">Nikkei 225</a> at the close of trading on 1 April due to Shinsei Bank not trading on the Prime Market.</li>
<li>We estimate there will be passive buying of 27.5m shares on <a href="https://www.smartkarma.com/entities/orix-corp" target="_blank" data-smartkarma-citation="entities:9936:1" rel="noopener">Orix Corp (8591 JP)</a> while there will be selling of 2.75m shares on <a href="https://www.smartkarma.com/entities/shinsei-bank-ltd" target="_blank" data-smartkarma-citation="entities:16897:1" rel="noopener">Shinsei Bank (8303 JP)</a> </li>
<li>There appears to be some pre-positioning on <a href="https://www.smartkarma.com/entities/orix-corp" target="_blank" data-smartkarma-citation="entities:9936:1" rel="noopener">Orix Corp (8591 JP)</a> - the stock could outperform heading into index inclusion. </li>
</ul>



Orix Corp (8591) replaces Shinsei Bank (8303) in the Nikkei 225 at the close of trading on 1 April due to Shinsei Bank not trading on the Prime Market.
We estimate there will be passive buying of 27.5m shares on Orix Corp (8591 JP) while there will be selling of 2.75m shares on Shinsei Bank (8303 JP) 
There appears to be some pre-positioning on Orix Corp (8591 JP) - the stock could outperform heading into index inclusion. 


Nikkei 225 Index Rebalance: ORIX (8591) Replaces Shinsei Bank (8303)

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>This article examines changes in corporate governance practices of 1,713 as well as changes in market caps, viewing the improvement in profitability as a change in ROA.</li>
<li>While ROA improvements haven’t motivated board practices to improve, they've tended to pay more attention to use of cash in key actions, but are somewhat biased toward shareholder-returns than investments.</li>
<li>Lower valuations were the main reason for the largest declines in market capitalization for the companies with the largest improvements in ROA over the last 13 months.</li>
</ul>


This article examines changes in corporate governance practices of 1,713 as well as changes in market caps, viewing the improvement in profitability as a change in ROA.
While ROA improvements haven’t motivated board practices to improve, they've tended to pay more attention to use of cash in key actions, but are somewhat biased toward shareholder-returns than investments.
Lower valuations were the main reason for the largest declines in market capitalization for the companies with the largest improvements in ROA over the last 13 months.


Japan's Governance: Do Companies Improve Their Corporate Governance when Profitability Improves?

<ul>
<li>This article focuses on the question: Do profitable companies improve corporate governance?</li>
<li>The more profitable companies tend to use the cash generated in a more thoughtful manner, while we can't say that they are more engaged in board practices.</li>
<li>The high percentage of foreign shareholders in companies with high ROA may be related to the fact that these companies have become more careful about how they use cash flow.</li>
</ul>


This article focuses on the question: Do profitable companies improve corporate governance?
The more profitable companies tend to use the cash generated in a more thoughtful manner, while we can't say that they are more engaged in board practices.
The high percentage of foreign shareholders in companies with high ROA may be related to the fact that these companies have become more careful about how they use cash flow.


Japan's Governance: Do Profitable Companies Improve Corporate Governance?

<ul>
<li>Using latest data on the impact of major shareholder interests on corporate governance and stock price performance, we also consider this issue from the perspective of parent-subsidiary listings.</li>
<li>The results of the correlation analysis for 3 groups of companies in % of ownerships showed that the major shareholder factor has a significant impact on corporate governance practices.</li>
<li>Regarding board practices, companies with shareholders holding more than 50% (listed subsidiaries) are generally less conscious of improving their practices, while the results for key actions are mixed across criteria.</li>
</ul>


Using latest data on the impact of major shareholder interests on corporate governance and stock price performance, we also consider this issue from the perspective of parent-subsidiary listings.
The results of the correlation analysis for 3 groups of companies in % of ownerships showed that the major shareholder factor has a significant impact on corporate governance practices.
Regarding board practices, companies with shareholders holding more than 50% (listed subsidiaries) are generally less conscious of improving their practices, while the results for key actions are mixed across criteria.


Japan's Governance: Parent-Subsidiary Listing Investment Strategy Update (4)

<ul>
<li>Hang Seng announced the results of the March rebalance post market close Friday. Two adds for the HSI, one set of changes for HSCEI, three sets for HSTECH.</li>
<li>An ad hoc rebalance was announced for the KOSDAQ150 following Osstem being designated an 'Administrative Issue'. In IPO world, we have LIC in India and SBI Sumishin NetBank coming up.</li>
<li>Friday was the review cutoff date for the March rebalance of the ASX200 Index. The ATO has provided Aventus with the tax ruling and that creates a timing issue.</li>
</ul>


Hang Seng announced the results of the March rebalance post market close Friday. Two adds for the HSI, one set of changes for HSCEI, three sets for HSTECH.
An ad hoc rebalance was announced for the KOSDAQ150 following Osstem being designated an 'Administrative Issue'. In IPO world, we have LIC in India and SBI Sumishin NetBank coming up.
Friday was the review cutoff date for the March rebalance of the ASX200 Index. The ATO has provided Aventus with the tax ruling and that creates a timing issue.


Index Rebalance & ETF Flow Recap: HSI, HSCEI, HSTECH, HSCI, S&P/ASX, SET50, LIC, SBI Sumishin, Crown

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)

Nikkei 225 Index Rebalance: ORIX (8591) Replaces Shinsei Bank (8303)

Orix Corp replaces Shinsei Bank in the Nikkei225 Index at the close on 1 April. Passive trackers will need to buy 27.5m shares of Orix and sell...

Brian Freitas

Japan's Governance: Do Companies Improve Their Corporate Governance when Profitability Improves?

I will examine the question of whether the impact of improved profitability, rather than whether profitability is high or low right now, might...

Metrical Inc

Japan's Governance: Do Profitable Companies Improve Corporate Governance?

This article focuses on the question: Do profitable companies improve corporate governance? I examined the corporate governance practices by using...

Metrical Inc

Japan's Governance: Parent-Subsidiary Listing Investment Strategy Update (4)

The correlation analysis for 3 groups of companies in % of ownerships showed that the major shareholder factor has a significant impact on...

Metrical Inc

Index Rebalance & ETF Flow Recap: HSI, HSCEI, HSTECH, HSCI, S&P/ASX, SET50, LIC, SBI Sumishin, Crown

This recap highlights Insights covering Asian index rebalances (announcements/ forecasts/ IPO Fast Entry/ M&A driven changes). We also highlight...

Brian Freitas