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

Rikki Malik

Thematic (Sector/Industry)

<ul>
<li>One of the sectors we like for the next phase of the Japanese stock market</li>
<li>The market is not giving the benefit of the doubt to monetisation of its property portfolio</li>
<li>The core  railway business is back to pre-Covid 19  levels</li>
</ul>


One of the sectors we like for the next phase of the Japanese stock market
The market is not giving the benefit of the doubt to monetisation of its property portfolio
The core  railway business is back to pre-Covid 19  levels


All Aboard! JR East and the Monetisation of Its Property Assets

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>A comparison of two surveys shows progress in disclosing GHG emissions over half-year, with small increase in Scope 1 and Scope 2, while little progress was made in Scope 3.</li>
<li>Many companies are cautious about disclosing in annual securities reports, even if they are certified by a third-party certification body or stated in their own integrated reports.</li>
<li>However, FSA will require companies with over 3 trillion yen in market capitalization to disclose to Scope 3 in FY3/2027, and most companies are likely to comply with this requirement.</li>
</ul>


A comparison of two surveys shows progress in disclosing GHG emissions over half-year, with small increase in Scope 1 and Scope 2, while little progress was made in Scope 3.
Many companies are cautious about disclosing in annual securities reports, even if they are certified by a third-party certification body or stated in their own integrated reports.
However, FSA will require companies with over 3 trillion yen in market capitalization to disclose to Scope 3 in FY3/2027, and most companies are likely to comply with this requirement.


Companies' Interest in Lowering Market Cap Threshold and Timing of Scope 3 Disclosure Requirements

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>
<a href="https://www.smartkarma.com/entities/tokyo-metro-co-ltd" target="_blank" data-smartkarma-citation="entities:40930:1" rel="noopener">Tokyo Metro (9023 JP)</a>'s listing has been approved by the JPX and the stock is expected to start trading on the Prime Market from 23 October.</li>
<li>At the reported indicative IPO price of JPY 1100/share, <a href="https://www.smartkarma.com/entities/tokyo-metro-co-ltd" target="_blank" data-smartkarma-citation="entities:40930:1" rel="noopener">Tokyo Metro (9023 JP)</a> will be valued at JPY 639.1bn (US$4.49bn).</li>
<li>The stock should be added to one global index on 29 October, to 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">TOPIX INDEX</a> on 28 November, while another global index inclusion will need to wait till February.</li>
</ul>



Tokyo Metro (9023 JP)'s listing has been approved by the JPX and the stock is expected to start trading on the Prime Market from 23 October.
At the reported indicative IPO price of JPY 1100/share, Tokyo Metro (9023 JP) will be valued at JPY 639.1bn (US$4.49bn).
The stock should be added to one global index on 29 October, to the TOPIX INDEX on 28 November, while another global index inclusion will need to wait till February.


Tokyo Metro (9023 JP) IPO:  TPX Inclusion in November; Global Indices: One in October, One in Feb

<ul>
<li>Policy shareholdings don't create tension in management and ensure the interests of minority shareholders. Secondly, holding shares that don't create value can burden capital profitability and undermine shareholder interests.</li>
<li>The increase in foreign ownership only changed the mindset of some company managers, but “TSE's request” was enough to awake managers who had become accustomed to being protected by cross-shareholdings.</li>
<li>If reducing policy shareholdings is viewed as HR issues related to the director election agenda, it makes sense why improvements haven't progressed similarly to the unclear nomination process for directors.</li>
</ul>


Policy shareholdings don't create tension in management and ensure the interests of minority shareholders. Secondly, holding shares that don't create value can burden capital profitability and undermine shareholder interests.
The increase in foreign ownership only changed the mindset of some company managers, but “TSE's request” was enough to awake managers who had become accustomed to being protected by cross-shareholdings.
If reducing policy shareholdings is viewed as HR issues related to the director election agenda, it makes sense why improvements haven't progressed similarly to the unclear nomination process for directors.


Slow Policy Shareholdings Reduction Is Similar Backdrop to Unclear Nomination Process for Directors

Cross Asset Strategy

<ul>
<li>Change in strategy by the Chinese authorities mean this is more than a trade</li>
<li>Sentiment, valuations and positioning are still supportive despite the rally</li>
<li>Overbought conditions in the very short-term and the technical picture is mixed </li>
</ul>


Change in strategy by the Chinese authorities mean this is more than a trade
Sentiment, valuations and positioning are still supportive despite the rally
Overbought conditions in the very short-term and the technical picture is mixed 


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)

All Aboard! JR East and the Monetisation of Its Property Assets

An undervalued sector in the Japanese stock market which is at the intersection of a few key themes including activism, raising returns and...

Rikki Malik

Companies' Interest in Lowering Market Cap Threshold and Timing of Scope 3 Disclosure Requirements

I would like to discuss the issues on the August 21 Nikkei article, “Greenhouse Gas Disclosure, Only 4% of ‘Scope 3’ Reported, According to...

Metrical Inc

Tokyo Metro (9023 JP) IPO: TPX Inclusion in November; Global Indices: One in October, One in Feb

Tokyo Metro (9023 JP) has announced the IPO price band of JPY 1100-1200/share. Book building starts today, and final pricing will be decided on 15...

Brian Freitas

Slow Policy Shareholdings Reduction Is Similar Backdrop to Unclear Nomination Process for Directors

I would like to discuss the issues on the August 22 Nikkei Shimbun article, “FSA Expands Disclosure Requirement to Prevent ‘Formal Dissolution’ of...

Metrical Inc

Examining the Bear Case for China

Chinese authorities shift strategy , and while sentiment and valuations support the rally, in short-term there are overbought conditions and a...

Rikki Malik

All Aboard! JR East and the Monetisation of Its Property Assets

An undervalued sector in the Japanese stock market which is at the intersection of a few key themes including activism, raising returns and...

Rikki Malik

Companies' Interest in Lowering Market Cap Threshold and Timing of Scope 3 Disclosure Requirements

I would like to discuss the issues on the August 21 Nikkei article, “Greenhouse Gas Disclosure, Only 4% of ‘Scope 3’ Reported, According to...

Metrical Inc

Tokyo Metro (9023 JP) IPO: TPX Inclusion in November; Global Indices: One in October, One in Feb

Tokyo Metro (9023 JP) has announced the IPO price band of JPY 1100-1200/share. Book building starts today, and final pricing will be decided on 15...

Brian Freitas

Slow Policy Shareholdings Reduction Is Similar Backdrop to Unclear Nomination Process for Directors

I would like to discuss the issues on the August 22 Nikkei Shimbun article, “FSA Expands Disclosure Requirement to Prevent ‘Formal Dissolution’ of...

Metrical Inc

Examining the Bear Case for China

​Chinese authorities shift strategy , and while sentiment and valuations support the rally, in short-term there are overbought conditions and a...

Rikki Malik

Chinese authorities shift strategy , and while sentiment and valuations support the rally, in short-term there are overbought conditions and a...