Pan-Asia Catalysts/Events, Quiddity Advisors

Travis Lundy

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

TSE Tokyo Price Index TOPIX / Event-Driven

<ul>
<li>Every year (actually, every half year) it is a similar trade. There is a fiscal year-end dividend reinvestment trade for passive funds in Japan. </li>
<li>The month-end and quarter-end bring big flows, or not, depending on how things have gone.</li>
<li>Over the past 10-15 years or so, the two-day return on the March trade is pretty good. This year? It's complicated. </li>
</ul>


Every year (actually, every half year) it is a similar trade. There is a fiscal year-end dividend reinvestment trade for passive funds in Japan. 
The month-end and quarter-end bring big flows, or not, depending on how things have gone.
Over the past 10-15 years or so, the two-day return on the March trade is pretty good. This year? It's complicated. 


The Japan March-End Rebal and Dividend Trade (2026 Version)

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>Companies should consider that things may not go according to the assumption that showering individual shareholders with shareholder benefits will lead them to vote in favor of the company’s proposals.</li>
<li>Discussions of trading one share at a time based on trading conditions in other countries or comparative competitiveness fail to address the fundamental issue of inequality in shareholder rights.</li>
<li>Unless the fundamental issues are addressed, these measures will be ineffective, and—just as with TSE’s market reforms—it will take a long time to reach a fundamental solution.</li>
</ul>


Companies should consider that things may not go according to the assumption that showering individual shareholders with shareholder benefits will lead them to vote in favor of the company’s proposals.
Discussions of trading one share at a time based on trading conditions in other countries or comparative competitiveness fail to address the fundamental issue of inequality in shareholder rights.
Unless the fundamental issues are addressed, these measures will be ineffective, and—just as with TSE’s market reforms—it will take a long time to reach a fundamental solution.


Without Fundamental Solutions, Tackling Issues by Comparing to Other Countries Is the Usual Pattern

<ul>
<li>“The fact that Japanese companies hold vast cash reserves” is one aspect of the issue, but it's not root cause. Focusing solely on the means won't actually solve the problem.</li>
<li>While increasing growth investments and improving board practices are not wrong as strategies, few companies truly understand why they should pursue these initiatives or are able to implement them effectively.</li>
<li>Both investment and improvements in board practices are necessary measures for achieving the management goal of sustainably increasing shareholder interest. It is the responsibility of management to achieve this goal.</li>
</ul>


“The fact that Japanese companies hold vast cash reserves” is one aspect of the issue, but it's not root cause. Focusing solely on the means won't actually solve the problem.
While increasing growth investments and improving board practices are not wrong as strategies, few companies truly understand why they should pursue these initiatives or are able to implement them effectively.
Both investment and improvements in board practices are necessary measures for achieving the management goal of sustainably increasing shareholder interest. It is the responsibility of management to achieve this goal.


Problems Won’t Be Solved if a Company Gets Caught up in Debates over the Means to an End

<ul>
<li>Only 10% in Prime/Standard market were identified by investors as “showing progress in initiatives." Unless managers return to management facing shareholders head-on, initiatives addressing specific, individual challenges will remain superficial.</li>
<li>Investors should have voiced their opinions regarding the disclosure in  annual securities report prior to AGM, change in the record date, and postponement of the AGM by approximately one month.</li>
<li>Rather than focusing on resolving specific individual issues, the TSE should educate companies on the fact that management has fiduciary duties and must fulfill them.</li>
</ul>


Only 10% in Prime/Standard market were identified by investors as “showing progress in initiatives." Unless managers return to management facing shareholders head-on, initiatives addressing specific, individual challenges will remain superficial.
Investors should have voiced their opinions regarding the disclosure in  annual securities report prior to AGM, change in the record date, and postponement of the AGM by approximately one month.
Rather than focusing on resolving specific individual issues, the TSE should educate companies on the fact that management has fiduciary duties and must fulfill them.


Companies Don't Understand Why They Need to “Manage with Capital Costs and Stock Prices in Mind”?

<ul>
<li>Since companies that have listed on NYSE through ADR etc have been reporting their financial results under US-GAAP, it is expected that more companies will transition to IFRS as needed.</li>
<li>If IFRS is promoted on the assumption that “eliminating the periodic amortization of goodwill under Japanese-GAAP will likely lead to increased M&amp;A,” the discussion risks heading in the wrong direction.</li>
<li>Needless to say, successfully implementing PMI to increase future profits and cash flow is both more difficult and more important.</li>
</ul>


Since companies that have listed on NYSE through ADR etc have been reporting their financial results under US-GAAP, it is expected that more companies will transition to IFRS as needed.
If IFRS is promoted on the assumption that “eliminating the periodic amortization of goodwill under Japanese-GAAP will likely lead to increased M&amp;A,” the discussion risks heading in the wrong direction.
Needless to say, successfully implementing PMI to increase future profits and cash flow is both more difficult and more important.


Have Japanese-GAAP Helped Reduce the Number of Failed M&A Deals?

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)

The Japan March-End Rebal and Dividend Trade (2026 Version)

Every year, twice a year, a large number of companies pay dividends. That event is coming up again Monday. ETFs will have to buy the dividend...

Travis Lundy

Without Fundamental Solutions, Tackling Issues by Comparing to Other Countries Is the Usual Pattern

I would like to discuss the August 24 Nikkei article titled “Advancing the Digitalization of Shareholders’ Meetings: Boosting Small-Scale...

Metrical Inc

Problems Won’t Be Solved if a Company Gets Caught up in Debates over the Means to an End

I would like to discuss the issues on the July 26 Nikkei article titled “Companies Should Leverage Corporate Governance Code to Drive Growth.”

Metrical Inc

Companies Don't Understand Why They Need to “Manage with Capital Costs and Stock Prices in Mind”?

I 'd like to discuss the material ““Results of the Institutional Investor Survey on ‘Companies Showing Progress in Their Initiatives,’ etc....

Metrical Inc

Have Japanese-GAAP Helped Reduce the Number of Failed M&A Deals?

I would like to discuss the issues on the July 29 Nikkei article titled “Don’t Forget the Global Market When It Comes to Goodwill Accounting.”

Metrical Inc