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>The increase in net profit from the previous year outpaced the growth in dividends, which increased cash on hand for listed companies to a record high level. </li>
<li>Since the equity ratio of manufacturing sector is over 40% and there's little room for debt repayment, there's room for a considerable increase in dividends in conjunction with share repurchases.</li>
<li>If free cash flow isn't used to invest in growth and return profits to shareholders, rather than to pay small dividends to shareholders, cash on hand will continue to increase.</li>
</ul>


The increase in net profit from the previous year outpaced the growth in dividends, which increased cash on hand for listed companies to a record high level. 
Since the equity ratio of manufacturing sector is over 40% and there's little room for debt repayment, there's room for a considerable increase in dividends in conjunction with share repurchases.
If free cash flow isn't used to invest in growth and return profits to shareholders, rather than to pay small dividends to shareholders, cash on hand will continue to increase.


Cash on Hand Has Built up to a Level Where Small Shareholder Returns Are No Longer Sufficient

<ul>
<li>The increase in foreign ownership and the decline in cross-shareholdings have encouraged management reform. In order for engagement to be effective, it is essential to further reduce cross shareholdings.</li>
<li>Reasonable explanation of the reasons for such transfers as changes in the purpose of policy shareholding or contributions to retirement benefit trust must be provided in the annual securities report.</li>
<li>Rising stock prices increase the value of policy shareholdings. To accelerate the reduction of policy shareholdings, numerical targets should be published, such as by setting milestones.</li>
</ul>


The increase in foreign ownership and the decline in cross-shareholdings have encouraged management reform. In order for engagement to be effective, it is essential to further reduce cross shareholdings.
Reasonable explanation of the reasons for such transfers as changes in the purpose of policy shareholding or contributions to retirement benefit trust must be provided in the annual securities report.
Rising stock prices increase the value of policy shareholdings. To accelerate the reduction of policy shareholdings, numerical targets should be published, such as by setting milestones.


Amidst Changes in Purpose of Policy Shareholdings, We Should Note Whether They Are Really Decreasing

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

Rikki Malik

Cross Asset Strategy

<ul>
<li>A review of recent events/data  impacting our investment themes or outlook</li>
<li>Expectations for future US interest rate cuts get dialed back - JPY impact</li>
<li>CFTC data shows speculative froth has come out of some markets</li>
</ul>


A review of recent events/data  impacting our investment themes or outlook
Expectations for future US interest rate cuts get dialed back - JPY impact
CFTC data shows speculative froth has come out of some markets


Overview #7 Speculative Positioning Review

<ul>
<li>The percentage of shares held by individuals and trust banks fell from 17.6% to 16.9% and from 22.6% to 22.1%, respectively. Increasing individual investors' investment in Japanese equities isn't easy.</li>
<li>The presence of overseas investors will increase, as the percentage of shares held by foreigners, which has reached a record high, is expected to remain high in the future.</li>
<li>The percentage of shares held by corporations decreased slightly, and cross-shareholdings are gradually being unwound. The gradual decline is likely to continue in the future.</li>
</ul>


The percentage of shares held by individuals and trust banks fell from 17.6% to 16.9% and from 22.6% to 22.1%, respectively. Increasing individual investors' investment in Japanese equities isn't easy.
The presence of overseas investors will increase, as the percentage of shares held by foreigners, which has reached a record high, is expected to remain high in the future.
The percentage of shares held by corporations decreased slightly, and cross-shareholdings are gradually being unwound. The gradual decline is likely to continue in the future.


Foreign Ownership, Which Has Reached a Record High of 31.8%, Will Continue to Play a Major Role

Technical Analyst, Vermilion Research

Joe Jasper

Technical Analyst

Technical and Quantitative Research

Vermilion Research

Vermilion’s objective is to deliver timely, actionable, and unique technical research to professional investors through the application of our various technical indicators.

Our research strategists seek to highlight securities which we believe are at major inflection points, based on our various technical and quantitative indicators, and offer asymmetric risk/return profiles. Our unique research methodology, centered on relative strength, enables our strategists to deliver superior investment recommendations.

Our process begins by organizing the universe of actively traded stocks into discrete sectors, then into industry groups. We then apply our technical and quantitative tools to identify developing price trends. Once attractive trends are identified within a selected sector or group, we screen for individual stocks which we believe offer the best risk/reward profile. We provide a historical perspective that often reveals, through our long-term charts, how price patterns often repeat themselves over time.

Technical Analysis

<ul>
<li>We are seeing snap-back rallies in the largest global economies -- notably the U.S. and Japan, and also Europe to a lesser extent. However...</li>
<li>We're expecting to see lower highs develop at prior breakdown levels at 2690-2700 on the TOPIX and 4884 on the EURO STOXX 50, which are significant resistance levels.</li>
<li>Watching SPX resistance at 5585, or possible test of YTD highs/marginal new high, all fitting with our ongoing belief (since July 25) that ACWI-US going through 1-to 4-month pullback/consolidation.</li>
</ul>


We are seeing snap-back rallies in the largest global economies -- notably the U.S. and Japan, and also Europe to a lesser extent. However...
We're expecting to see lower highs develop at prior breakdown levels at 2690-2700 on the TOPIX and 4884 on the EURO STOXX 50, which are significant resistance levels.
Watching SPX resistance at 5585, or possible test of YTD highs/marginal new high, all fitting with our ongoing belief (since July 25) that ACWI-US going through 1-to 4-month pullback/consolidation.


MSCI ACWI Consolidation Continues; Outlook Remains Neutral; Buys Across Defensives & Other Sectors

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)

Cash on Hand Has Built up to a Level Where Small Shareholder Returns Are No Longer Sufficient

I would like to discuss the issues on the June 26 Nikkei Shimbun article, "Corporate Cash on Hand at 114 Trillion Yen, Record High; Increase...

Metrical Inc

Amidst Changes in Purpose of Policy Shareholdings, We Should Note Whether They Are Really Decreasing

I would like to discuss the issues on the June 15 Nikkei article, "Reduction of Policy Shareholdings, Disappearing Stable Shareholders: Management...

Metrical Inc

Overview #7 Speculative Positioning Review

Recent events/data have led to a dialing back of expectations for US interest rate cuts, while CFTC data indicates a decrease in speculative...

Rikki Malik

Foreign Ownership, Which Has Reached a Record High of 31.8%, Will Continue to Play a Major Role

I would like to discuss the issues on the summary of the document "Results of the Survey of Stock Distribution in FY2023" disclosed by the TSE on...

Metrical Inc

MSCI ACWI Consolidation Continues; Outlook Remains Neutral; Buys Across Defensives & Other Sectors

MSCI $ACWI Consolidation Continues; Outlook Remains Neutral; Snap-Back Rallies in Japan $Nikkei $TOPIX, U.S. $SPX, Europe $STOXX fits with our view...

Vermilion Research

Cash on Hand Has Built up to a Level Where Small Shareholder Returns Are No Longer Sufficient

I would like to discuss the issues on the June 26 Nikkei Shimbun article, "Corporate Cash on Hand at 114 Trillion Yen, Record High; Increase...

Metrical Inc

Amidst Changes in Purpose of Policy Shareholdings, We Should Note Whether They Are Really Decreasing

I would like to discuss the issues on the June 15 Nikkei article, "Reduction of Policy Shareholdings, Disappearing Stable Shareholders: Management...

Metrical Inc

Overview #7 Speculative Positioning Review

​Recent events/data have led to a dialing back of expectations for US interest rate cuts, while CFTC data indicates a decrease in speculative...

Rikki Malik

Foreign Ownership, Which Has Reached a Record High of 31.8%, Will Continue to Play a Major Role

I would like to discuss the issues on the summary of the document "Results of the Survey of Stock Distribution in FY2023" disclosed by the TSE on...

Metrical Inc

MSCI ACWI Consolidation Continues; Outlook Remains Neutral; Buys Across Defensives & Other Sectors

MSCI $ACWI Consolidation Continues; Outlook Remains Neutral; Snap-Back Rallies in Japan $Nikkei $TOPIX, U.S. $SPX, Europe $STOXX fits with our view...

Vermilion Research

Recent events/data have led to a dialing back of expectations for US interest rate cuts, while CFTC data indicates a decrease in speculative...