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

Index Rebalance

<ul>
<li>The JPX has designated <a href="https://www.smartkarma.com/entities/nidec-corp" target="_blank" data-smartkarma-citation="entities:7245:1" rel="noopener">Nidec Corp (6594 JP)</a> as a 'Security on Special Alert' due to a disclaimer of opinion in the annual report (among other issues).</li>
<li>Nikkei has announced the deletion of <a href="https://www.smartkarma.com/entities/nidec-corp" target="_blank" data-smartkarma-citation="entities:7245:1" rel="noopener">Nidec Corp (6594 JP)</a> from the <a href="https://www.smartkarma.com/entities/nikkei-225" target="_blank" data-smartkarma-citation="entities:22909:1" rel="noopener">Nikkei 225 (NKY INDEX)</a>. <a href="https://www.smartkarma.com/entities/ibiden-co-ltd" target="_blank" data-smartkarma-citation="entities:16630:1" rel="noopener">Ibiden Co Ltd (4062 JP)</a> will be added to the index.</li>
<li>
<a href="https://www.smartkarma.com/entities/nidec-corp" target="_blank" data-smartkarma-citation="entities:7245:1" rel="noopener">Nidec Corp (6594 JP)</a> should also be deleted from the <a href="https://www.smartkarma.com/entities/tokyo-stock-exchange-tokyo-price-index-topix" target="_blank" data-smartkarma-citation="entities:22910:1" rel="noopener">TSE Tokyo Price Index TOPIX (TPX INDEX)</a>. Both index deletions should take the stock a lot lower from here.</li>
</ul>


The JPX has designated Nidec Corp (6594 JP) as a 'Security on Special Alert' due to a disclaimer of opinion in the annual report (among other issues).
Nikkei has announced the deletion of Nidec Corp (6594 JP) from the Nikkei 225 (NKY INDEX). Ibiden Co Ltd (4062 JP) will be added to the index.

Nidec Corp (6594 JP) should also be deleted from the TSE Tokyo Price Index TOPIX (TPX INDEX). Both index deletions should take the stock a lot lower from here.


Nikkei 225 Index Rebalance: 🚨Ibiden (4062 JP) To Replace Nidec (6594 JP) 🚨

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>One year has passed since the disclosure of sustainability information in annual securities reports, and the FSA is considering restructuring its disclosure guidelines to support sustainability disclosure by listed companies.</li>
<li>Sustainability information in annual securities reports is shifting from “what should be stated” to “what content should be stated,” and the volume of information is increasing accordingly.</li>
<li>Valuable information is that investors can understand what initiatives the company has implemented to address the challenges, the goals and timelines it has set, and whether its progress is justified.</li>
</ul>


One year has passed since the disclosure of sustainability information in annual securities reports, and the FSA is considering restructuring its disclosure guidelines to support sustainability disclosure by listed companies.
Sustainability information in annual securities reports is shifting from “what should be stated” to “what content should be stated,” and the volume of information is increasing accordingly.
Valuable information is that investors can understand what initiatives the company has implemented to address the challenges, the goals and timelines it has set, and whether its progress is justified.


Sustainability Information in Annual Securities Reports Is Evolving into Valuable Information

<ul>
<li>In many cases, management is involved rather than seeking clarification of the actual situation from an independent body. This is the reason why scandals are repeated.</li>
<li>In Japan, awareness of integrity and code of ethics compliance remains very low. A thorough awareness change is required to consider “what is ethical to do and what is not.”</li>
<li>Even after the revision of Whistleblower Protection Act in 2022, harassment of whistleblowers hasn’t stopped. Consequently, the number of whistleblowers is low and whistleblowing hasn’t been able to deter scandals.</li>
</ul>


In many cases, management is involved rather than seeking clarification of the actual situation from an independent body. This is the reason why scandals are repeated.
In Japan, awareness of integrity and code of ethics compliance remains very low. A thorough awareness change is required to consider “what is ethical to do and what is not.”
Even after the revision of Whistleblower Protection Act in 2022, harassment of whistleblowers hasn’t stopped. Consequently, the number of whistleblowers is low and whistleblowing hasn’t been able to deter scandals.


In Order to Avoid Scandals in the Future, Management Must Take Leadership in Changing Mindsets

<ul>
<li>With the TSE shortly declaring the conclusion of discussions regarding parent-subsidiary listings, more parent-subsidiary listings (including listed affiliates) are likely to continue to appear going forward.</li>
<li>“TSE's Request” states a restructuring of business portfolio, but leaves out the issue of restructuring the parent company's business portfolio and shifting to a management approach that increases corporate value.</li>
<li>The parent-subsidiary listings (including listed affiliates) that continue to be created will continue to provide investment opportunities for investors, including activist investors.</li>
</ul>


With the TSE shortly declaring the conclusion of discussions regarding parent-subsidiary listings, more parent-subsidiary listings (including listed affiliates) are likely to continue to appear going forward.
“TSE's Request” states a restructuring of business portfolio, but leaves out the issue of restructuring the parent company's business portfolio and shifting to a management approach that increases corporate value.
The parent-subsidiary listings (including listed affiliates) that continue to be created will continue to provide investment opportunities for investors, including activist investors.


“Parent-Subsidiary Listing” Heaven Continues to Provide Rich Investment Performance for Investors

Asia L/S Equity PM/Macro/Thematic Idea Generation

Rikki Malik

Thematic (Sector/Industry)

<ul>
<li>The BoJ's reluctance to raise rates ensures negative real rates for longer</li>
<li>Supply and Demand for both commercial and residential are skewed towards price rises in central Tokyo and other urban areas</li>
<li>Property prices are at a big discount to other major developed countries</li>
</ul>


The BoJ's reluctance to raise rates ensures negative real rates for longer
Supply and Demand for both commercial and residential are skewed towards price rises in central Tokyo and other urban areas
Property prices are at a big discount to other major developed countries


Property Sector a Winner in Japan Reflationary Era

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: 🚨Ibiden (4062 JP) To Replace Nidec (6594 JP) 🚨

TOPIX trackers are estimated to sell a lot of Nidec shares at the close today. Ibiden is already up a lot and that could lead to inclusion in a...

Brian Freitas

Sustainability Information in Annual Securities Reports Is Evolving into Valuable Information

I would like to discuss the issues on the November 16 Nikkei article, “Corporate Fraud; Challenges in Preparing for Response; 30% of Companies Have...

Metrical Inc

In Order to Avoid Scandals in the Future, Management Must Take Leadership in Changing Mindsets

I would like to discuss the issues on the November 16 Nikkei article, “Corporate Fraud; Challenges in Preparing for Response; 30% of Companies Have...

Metrical Inc

“Parent-Subsidiary Listing” Heaven Continues to Provide Rich Investment Performance for Investors

I would like to discuss the document entitled “Status of Discussions at the Study Group on Minority Shareholder Protection at Dependent Listed...

Metrical Inc

Property Sector a Winner in Japan Reflationary Era

BoJ keeps real rates negative, driving up property prices in urban areas like central Tokyo, where supply and demand is mismatched

Rikki Malik

Nikkei 225 Index Rebalance: 🚨Ibiden (4062 JP) To Replace Nidec (6594 JP) 🚨

TOPIX trackers are estimated to sell a lot of Nidec shares at the close today. Ibiden is already up a lot and that could lead to inclusion in a...

Brian Freitas

Sustainability Information in Annual Securities Reports Is Evolving into Valuable Information

I would like to discuss the issues on the November 16 Nikkei article, “Corporate Fraud; Challenges in Preparing for Response; 30% of Companies Have...

Metrical Inc

In Order to Avoid Scandals in the Future, Management Must Take Leadership in Changing Mindsets

I would like to discuss the issues on the November 16 Nikkei article, “Corporate Fraud; Challenges in Preparing for Response; 30% of Companies Have...

Metrical Inc

“Parent-Subsidiary Listing” Heaven Continues to Provide Rich Investment Performance for Investors

I would like to discuss the document entitled “Status of Discussions at the Study Group on Minority Shareholder Protection at Dependent Listed...

Metrical Inc

Property Sector a Winner in Japan Reflationary Era

​BoJ keeps real rates negative, driving up property prices in urban areas like central Tokyo, where supply and demand is mismatched

Rikki Malik

BoJ keeps real rates negative, driving up property prices in urban areas like central Tokyo, where supply and demand is mismatched