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>Declining components from MSCI indexes will lead to less inflows from active as well as passive funds, and less transmission from the sell-side to global investors.</li>
<li>Based on the assumption that the world's top companies have grown in response to changes in the environment, Japanese companies may be relatively slow in making management decisions for growth.</li>
<li>As benchmark adopters reduce their investments in Japanese equities, investors adopting investment strategies that are less concerned with benchmarks will have a greater presence than ever before.</li>
</ul>


Declining components from MSCI indexes will lead to less inflows from active as well as passive funds, and less transmission from the sell-side to global investors.
Based on the assumption that the world's top companies have grown in response to changes in the environment, Japanese companies may be relatively slow in making management decisions for growth.
As benchmark adopters reduce their investments in Japanese equities, investors adopting investment strategies that are less concerned with benchmarks will have a greater presence than ever before.


Is Slower Management Decision Making of Japanese Companies Relate to Slower Growth of Market Cap?

<ul>
<li>Since dividend income and unrealized gains on ETFs have significant impact on BOJ's finances, the sales of ETF will be discussed, considering BOJ's overall balance sheet and income/expenses as well.</li>
<li>There're unexamined issues, whether the central bank's purchase of stocks was really good thing, whether it distorted the secondary market, and whether management reforms were delayed by underpinning the stocks.</li>
<li>BOJ can move on to the issue of ETF disposition when the impact of policy rate hikes is recognized and the market stabilizes, but until then the problems will persist.</li>
</ul>


Since dividend income and unrealized gains on ETFs have significant impact on BOJ's finances, the sales of ETF will be discussed, considering BOJ's overall balance sheet and income/expenses as well.
There're unexamined issues, whether the central bank's purchase of stocks was really good thing, whether it distorted the secondary market, and whether management reforms were delayed by underpinning the stocks.
BOJ can move on to the issue of ETF disposition when the impact of policy rate hikes is recognized and the market stabilizes, but until then the problems will persist.


ETF Sale Won't Be Concluded Soon, but as Long as BOJ Keeps Holding Them, the Problems Will Persist

<ul>
<li>Many companies have established policies on human capital but haven't yet implemented specific measures. Solving issues related to human capital is an area in which Japanese companies lag far behind.</li>
<li>With even the understanding of diversity within the company in jeopardy, it is unlikely to reach a solution to human rights in the supply chain.</li>
<li>Japanese companies have traditionally been active in investing in goods, but have been reluctant to invest in people. Many companies need to start with an understanding of people.</li>
</ul>


Many companies have established policies on human capital but haven't yet implemented specific measures. Solving issues related to human capital is an area in which Japanese companies lag far behind.
With even the understanding of diversity within the company in jeopardy, it is unlikely to reach a solution to human rights in the supply chain.
Japanese companies have traditionally been active in investing in goods, but have been reluctant to invest in people. Many companies need to start with an understanding of people.


Hopefully, CSDDD Mandates Will Advance Human Rights Efforts, the Weakest Area for Japanese Companies

<ul>
<li>TSE is likely to raise the current Growth Market listing criteria of at least 500 million yen in tradable equity market capitalization, probably starting in April 2026.</li>
<li>Since listing examinations are already being conducted with the new criteria in mind, IPO reserves are being prepared with a larger market capitalization than before.</li>
<li>It is unclear how much will be raised, but companies will prepare for listing by increasing its market capitalization through the use of the secondary market and M&amp;A.</li>
</ul>


TSE is likely to raise the current Growth Market listing criteria of at least 500 million yen in tradable equity market capitalization, probably starting in April 2026.
Since listing examinations are already being conducted with the new criteria in mind, IPO reserves are being prepared with a larger market capitalization than before.
It is unclear how much will be raised, but companies will prepare for listing by increasing its market capitalization through the use of the secondary market and M&amp;A.


Listing Criteria for the TSE Growth Market Is Expected to Be Raised Starting April 2026

<ul>
<li>The previous share price of FUJISOFT did not reach the value it should have, and therefore, the company did not achieve its management goal of maximizing shareholder profit.</li>
<li>The decision for shareholder return or investment in growth rests with management. Cash returned to shareholders is simply invested by investors to find investments where they can earn better investment.</li>
<li>Rather than “shareholder pressure,” we should think this is the beginning of an effort to return to the basics of shareholder-oriented management, which is to expand shareholder interests.</li>
</ul>


The previous share price of FUJISOFT did not reach the value it should have, and therefore, the company did not achieve its management goal of maximizing shareholder profit.
The decision for shareholder return or investment in growth rests with management. Cash returned to shareholders is simply invested by investors to find investments where they can earn better investment.
Rather than “shareholder pressure,” we should think this is the beginning of an effort to return to the basics of shareholder-oriented management, which is to expand shareholder interests.


Going Private Is Not an “exit” from the Market, but the Beginning of the Next Step

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)

Is Slower Management Decision Making of Japanese Companies Relate to Slower Growth of Market Cap?

I would like to discuss the issues on the December 11 Nikkei article, “Emerging, “Japanese Stocks Face Hurdle in Global Indexes, ‘Promising’ Sanrio...

Metrical Inc

ETF Sale Won't Be Concluded Soon, but as Long as BOJ Keeps Holding Them, the Problems Will Persist

I would like to discuss the issues on the December 1 Nikkei Shimbun article, “BOJ's Bizarre Profit from Stocks: Dividends Exceed 1 Trillion Yen,...

Metrical Inc

Hopefully, CSDDD Mandates Will Advance Human Rights Efforts, the Weakest Area for Japanese Companies

I would like to discuss the issues on the December 11 Nikkei article, “PwC Consultant Diagnoses Human Rights Status of Companies in Response to...

Metrical Inc

Listing Criteria for the TSE Growth Market Is Expected to Be Raised Starting April 2026

I would like to discuss the issues on the December 9 Nikkei Shimbun article, Newly Listed Companies: ‘No Rush to Public Listing’ Approaching 50%...

Metrical Inc

Going Private Is Not an “exit” from the Market, but the Beginning of the Next Step

I would like to discuss the issues on the December 4 Nikkei article, “Unwanted Going Private Expands as Companies Lose Management Autonomy."

Metrical Inc