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

Rikki Malik

Cross Asset Strategy

<ul>
<li>Act II  of the drama begins  and continues from where it left off in early August</li>
<li>Sentiment has changed - bad news really  is  bad news</li>
<li>With &gt;100 basis points of cuts already priced in before year end...</li>
</ul>


Act II  of the drama begins  and continues from where it left off in early August
Sentiment has changed - bad news really  is  bad news
With &gt;100 basis points of cuts already priced in before year end...


Tactical Trading – Time to Sell Japan Again

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>While cash flow has improved, companies haven't found promising investment opportunities. Continuation of a rigid dividend policy is another factor that further increases cash on hand.</li>
<li>Given that the already high level of cash on hand is expected to build further in the current fiscal year, there is room to increase shareholder returns considerably.</li>
<li>For many companies, it is not easy to find new sources of investment other than through M&amp;A, and shareholder returns are the most effective way to reduce cash.</li>
</ul>


While cash flow has improved, companies haven't found promising investment opportunities. Continuation of a rigid dividend policy is another factor that further increases cash on hand.
Given that the already high level of cash on hand is expected to build further in the current fiscal year, there is room to increase shareholder returns considerably.
For many companies, it is not easy to find new sources of investment other than through M&amp;A, and shareholder returns are the most effective way to reduce cash.


For the Time Being, Stronger Shareholder Returns Are an Incentive for the Stock Price to Rise

<ul>
<li>A monthly review of how the markets and our themes are currently performing</li>
<li>Analysing what went wrong and what went right in stocks and sectors</li>
<li>Highlighting positions added or removed from the thematic investment portfolio</li>
</ul>


A monthly review of how the markets and our themes are currently performing
Analysing what went wrong and what went right in stocks and sectors
Highlighting positions added or removed from the thematic investment portfolio


August Themes and Thematic Portfolio Review

<ul>
<li>Fraud occurs regardless of the market on which the company is listed or the size of the company. Even if corporate governance is superficially in place, fraud will repeat itself.</li>
<li>If anything can deter the occurrence of scandals, it is diversity. It is necessary to create an organizational environment that accepts different values and allows people to voice their opinions.</li>
<li>In many cases, companies that committed fraud aren't delisted, and management doesn't take responsibility. There continues to be a bad tradition in which the whistleblower is blamed for the fraud.</li>
</ul>


Fraud occurs regardless of the market on which the company is listed or the size of the company. Even if corporate governance is superficially in place, fraud will repeat itself.
If anything can deter the occurrence of scandals, it is diversity. It is necessary to create an organizational environment that accepts different values and allows people to voice their opinions.
In many cases, companies that committed fraud aren't delisted, and management doesn't take responsibility. There continues to be a bad tradition in which the whistleblower is blamed for the fraud.


If It Is a Deterrent to the Occurrence of Scandals, Is It Diversity?

<ul>
<li>New TOPIX still has a large number of stocks and its components aren’t sufficiently liquid. TSE seems to have considered the companies that are under pressure to sell their shares.</li>
<li>The challenge for companies excluded from TOPIX components should achieve sustainable growth by continuous review of their business portfolios to achieve growth that they could not achieve in the past.</li>
<li>The company's performance must be in line with the plan disclosed by the company in response to the TSE's request. These companies should consider whether they should remain listed.</li>
</ul>


New TOPIX still has a large number of stocks and its components aren’t sufficiently liquid. TSE seems to have considered the companies that are under pressure to sell their shares.
The challenge for companies excluded from TOPIX components should achieve sustainable growth by continuous review of their business portfolios to achieve growth that they could not achieve in the past.
The company's performance must be in line with the plan disclosed by the company in response to the TSE's request. These companies should consider whether they should remain listed.


TOPIX Revision May Be an Opportunity for Companies to Choose to Go Private

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)

Tactical Trading – Time to Sell Japan Again

Act II of the drama continues with a shift in sentiment towards bad news, as over 100 basis points of cuts are already priced in before year end.

Rikki Malik

For the Time Being, Stronger Shareholder Returns Are an Incentive for the Stock Price to Rise

I would like to discuss the issues on the July 2 Nikkei Newspaper article, “Companies, Good-bye Sleeping Cash: Recruit Holdings Compresses 1...

Metrical Inc

August Themes and Thematic Portfolio Review

We review overall market performance, our investment themes, highlighting additions and substractions in the thematic portfolio.

Rikki Malik

If It Is a Deterrent to the Occurrence of Scandals, Is It Diversity?

I would like to discuss the July 16 Nikkei Shimbun article, "Corporate Accounting Fraud Increases for Third Consecutive Year, Approaching Record...

Metrical Inc

TOPIX Revision May Be an Opportunity for Companies to Choose to Go Private

I would like to discuss the issues on the Nikkei article published on July 11, 2024, "New TOPIX to boost corporate reforms."

Metrical Inc

Tactical Trading – Time to Sell Japan Again

​Act II of the drama continues with a shift in sentiment towards bad news, as over 100 basis points of cuts are already priced in before year end.

Rikki Malik

For the Time Being, Stronger Shareholder Returns Are an Incentive for the Stock Price to Rise

I would like to discuss the issues on the July 2 Nikkei Newspaper article, “Companies, Good-bye Sleeping Cash: Recruit Holdings Compresses 1...

Metrical Inc

August Themes and Thematic Portfolio Review

We review overall market performance, our investment themes, highlighting additions and substractions in the thematic portfolio.

Rikki Malik

If It Is a Deterrent to the Occurrence of Scandals, Is It Diversity?

I would like to discuss the July 16 Nikkei Shimbun article, "Corporate Accounting Fraud Increases for Third Consecutive Year, Approaching Record...

Metrical Inc

TOPIX Revision May Be an Opportunity for Companies to Choose to Go Private

I would like to discuss the issues on the Nikkei article published on July 11, 2024, "New TOPIX to boost corporate reforms."

Metrical Inc

Act II of the drama continues with a shift in sentiment towards bad news, as over 100 basis points of cuts are already priced in before year end.