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

Rikki Malik

Cross Asset Strategy

<ul>
<li>The JPY is knocking on a key level vs the USD</li>
<li>Uncertainty over Fed interest rate decision could be a catalyst for a reversal</li>
<li>Buy JPY, Gold and Gold miners on any short-term correction</li>
</ul>


The JPY is knocking on a key level vs the USD
Uncertainty over Fed interest rate decision could be a catalyst for a reversal
Buy JPY, Gold and Gold miners on any short-term correction


Tactical Trading -Fed Meeting a Catalyst for Counter-Trend Moves

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>Rather than lowering the minimum investment amount, attention is focused on whether the essence of the issue is whether the long-standing unit share system can be abolished.</li>
<li>This system, which doesn't grant voting rights to shareholders who don't hold more than certain number shares, has led companies to turn inward-looking by making AGMs skeleton and accelerating cross-shareholdings.</li>
<li>With corporate racketeer, who triggered the introduction of this system, gone and the reduction of cross-shareholdings beginning, shareholder units that can exercise voting rights for open AGMs should be reexamined.</li>
</ul>


Rather than lowering the minimum investment amount, attention is focused on whether the essence of the issue is whether the long-standing unit share system can be abolished.
This system, which doesn't grant voting rights to shareholders who don't hold more than certain number shares, has led companies to turn inward-looking by making AGMs skeleton and accelerating cross-shareholdings.
With corporate racketeer, who triggered the introduction of this system, gone and the reduction of cross-shareholdings beginning, shareholder units that can exercise voting rights for open AGMs should be reexamined.


Share Trading Unit System, Which Made AGM Skeleton and Spurred Cross-Shareholdings, Has Done Its Job

<ul>
<li>Comparing the number of Japanese companies in top 50 global market capitalization and Japan's GDP as percentage of world's GDP in 1989, it's clear that economy and companies didn’t grow.</li>
<li>Without more Japanese companies that have an edge in profitability, a key focus for long-term global investors, it will not be possible to put long-term investment money into Japanese equities.</li>
<li>It is assumed that BoJ's policy of inducing the yen to depreciate through ultra-monetary easing may have in part spoiled company managers and caused them to neglect their corporate efforts.</li>
</ul>


Comparing the number of Japanese companies in top 50 global market capitalization and Japan's GDP as percentage of world's GDP in 1989, it's clear that economy and companies didn’t grow.
Without more Japanese companies that have an edge in profitability, a key focus for long-term global investors, it will not be possible to put long-term investment money into Japanese equities.
It is assumed that BoJ's policy of inducing the yen to depreciate through ultra-monetary easing may have in part spoiled company managers and caused them to neglect their corporate efforts.


Companies Should Reset the Yen's Depreciation Benefit Mindset and Regain Core Competencies

<ul>
<li>If a company seeks immediate effects to improve capital profitability, it'll return cash to shareholders because it'll be years before the company can recoup it by making more investments now.</li>
<li>Even companies that have increased valuations by raising their capital profitability can improve it by reducing their cash on hand and policy shareholdings, which are still too large.</li>
<li>Companies with low capital profitability and low valuations have to gain investor confidence through quarterly earnings disclosures by demonstrating that their disclosed goals are achievable.</li>
</ul>


If a company seeks immediate effects to improve capital profitability, it'll return cash to shareholders because it'll be years before the company can recoup it by making more investments now.
Even companies that have increased valuations by raising their capital profitability can improve it by reducing their cash on hand and policy shareholdings, which are still too large.
Companies with low capital profitability and low valuations have to gain investor confidence through quarterly earnings disclosures by demonstrating that their disclosed goals are achievable.


Disclosure Is Important, but Walk the Talk Is More Important

Index Rebal Trades & Special Situations, Quiddity Advisors

Janaghan Jeyakumar, CFA

Index Rebal Trades & Special Situations

Quiddity Advisors

Pan-Asia Catalysts/Events

Event-Driven

<ul>
<li>Quiddity's "Who is Ready" series of insights aims to objectively identify names listed on the Tokyo Stock Exchange that are potential additions to the TOPIX Index in future.</li>
<li>
<a href="https://www.smartkarma.com/entities/sunwels-co-ltd" target="_blank" data-smartkarma-citation="entities:43702:1" rel="noopener">SUNWELS Co (9229 JP)</a> and <a href="https://www.smartkarma.com/entities/macbee-planet-inc" target="_blank" data-smartkarma-citation="entities:39863:1" rel="noopener">Macbee Planet (7095 JP)</a> moved to the Prime market in July 2024 and their TOPIX Inclusion events took place at the end of August 2024.</li>
<li>We currently have <a href="https://www.smartkarma.com/entities/celsys-inc" target="_blank" data-smartkarma-citation="entities:20774:1" rel="noopener">CELSYS (3663 JP)</a>, <a href="https://www.smartkarma.com/entities/japan-eyewear-holdings-co-ltd" target="_blank" data-smartkarma-citation="entities:40217:1" rel="noopener">Japan Eyewear Holdings (5889 JP)</a>, and <a href="https://www.smartkarma.com/entities/core-concept-technologies-inc" target="_blank" data-smartkarma-citation="entities:34323:1" rel="noopener">Core Concept Technologies Inc (4371 JP)</a> in our TOPIX Inclusions pre-event watchlist.</li>
</ul>


Quiddity's "Who is Ready" series of insights aims to objectively identify names listed on the Tokyo Stock Exchange that are potential additions to the TOPIX Index in future.

SUNWELS Co (9229 JP) and Macbee Planet (7095 JP) moved to the Prime market in July 2024 and their TOPIX Inclusion events took place at the end of August 2024.
We currently have CELSYS (3663 JP), Japan Eyewear Holdings (5889 JP), and Core Concept Technologies Inc (4371 JP) in our TOPIX Inclusions pre-event watchlist.


TOPIX Inclusions: Who Is Ready (September 2024)

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 -Fed Meeting a Catalyst for Counter-Trend Moves

JPY, Gold, and Gold miners have the potential for a short-term reversal due to uncertainty over extent of Fed interest rate decision.

Rikki Malik

Companies Should Reset the Yen's Depreciation Benefit Mindset and Regain Core Competencies

I would like to discuss the issues on the July 26 Nikkei article, “Japanese Stocks on a Growth Path: Market Reforms Needed Now."

Metrical Inc

Disclosure Is Important, but Walk the Talk Is More Important

I would like to discuss the issues on the July 24 Nikkei article, “Disclosure of ‘how money is used’ doubles: Mitsui Fudosan's investment in growth...

Metrical Inc

TOPIX Inclusions: Who Is Ready (September 2024)

Our long-term pre-event candidate Celsys (3663 JP) has outperformed TOPIX by +21.3% in the last month. The stock has decent earnings momentum and...

Janaghan Jeyakumar, CFA

Tactical Trading -Fed Meeting a Catalyst for Counter-Trend Moves

JPY, Gold, and Gold miners have the potential for a short-term reversal due to uncertainty over extent of Fed interest rate decision.

Rikki Malik

Share Trading Unit System, Which Made AGM Skeleton and Spurred Cross-Shareholdings, Has Done Its Job

I would like to discuss the issues raised in the TSE's July 24th disclosure regarding the “Establishment of a Study Group on the State of Small...

Metrical Inc

Companies Should Reset the Yen's Depreciation Benefit Mindset and Regain Core Competencies

I would like to discuss the issues on the July 26 Nikkei article, “Japanese Stocks on a Growth Path: Market Reforms Needed Now."

Metrical Inc

Disclosure Is Important, but Walk the Talk Is More Important

I would like to discuss the issues on the July 24 Nikkei article, “Disclosure of ‘how money is used’ doubles: Mitsui Fudosan's investment in growth...

Metrical Inc

TOPIX Inclusions: Who Is Ready (September 2024)

Our long-term pre-event candidate Celsys (3663 JP) has outperformed TOPIX by +21.3% in the last month. The stock has decent earnings momentum and...

Janaghan Jeyakumar, CFA