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>For first time in 30 years, the fund is back, matching the demand of companies that want to reduce cross-holdings immediately and companies that want more time to sell cross-holdings.</li>
<li>If the voting rights of cross-shareholdings contributed to the fund are retained, corporate governance will remain an issue until the fund's investment is terminated.</li>
<li>In reviewing recently filed annual securities reports, we often see cases where cross-held shares in more closely related companies are contributed to retirement benefit trusts instead of being sold.</li>
</ul>


For first time in 30 years, the fund is back, matching the demand of companies that want to reduce cross-holdings immediately and companies that want more time to sell cross-holdings.
If the voting rights of cross-shareholdings contributed to the fund are retained, corporate governance will remain an issue until the fund's investment is terminated.
In reviewing recently filed annual securities reports, we often see cases where cross-held shares in more closely related companies are contributed to retirement benefit trusts instead of being sold.


A New Type Of "Deemed Shareholding" Has Emerged!

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

Rikki Malik

Cross Asset Strategy

<ul>
<li>The first Act of this drama has played out in a very short time frame</li>
<li>The trend has likely changed for the JPY and it won’t be back to business as usual for the carry trade</li>
<li>This should benefit both real incomes and consumption in Japan</li>
</ul>


The first Act of this drama has played out in a very short time frame
The trend has likely changed for the JPY and it won’t be back to business as usual for the carry trade
This should benefit both real incomes and consumption in Japan


Are We There Yet? What Next for Japanese Assets?

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

TSE Tokyo Price Index TOPIX / Technical Analysis

<ul>
<li>We continue to believe a 1-4-month pullback/consolidation is ongoing. Important supports have been violated, including $110 on MSCI ACWI (ACWI-US) and $41 on MSCI EM (EEM-US).</li>
<li>We're shifting our outlook to neutral on $ACWI after being bullish since early-November 2023. Major price breakdowns combined with deteriorating market dynamics have increased the odds of a topping pattern.</li>
<li>Also downgrading Japan to market weight. 7/25/24 we said "Japan's TOPIX breaking below 2800-2815 is near-term bearish, suggests it could pull back to its long-term uptrend, or worse."</li>
</ul>


We continue to believe a 1-4-month pullback/consolidation is ongoing. Important supports have been violated, including $110 on MSCI ACWI (ACWI-US) and $41 on MSCI EM (EEM-US).
We're shifting our outlook to neutral on $ACWI after being bullish since early-November 2023. Major price breakdowns combined with deteriorating market dynamics have increased the odds of a topping pattern.
Also downgrading Japan to market weight. 7/25/24 we said "Japan's TOPIX breaking below 2800-2815 is near-term bearish, suggests it could pull back to its long-term uptrend, or worse."


Downgrading Japan; Stay Defensive; Downgrading Outlook on Global Equities $ACWI to Neutral

<ul>
<li>The government only considers foreign personnel as labor force and accepts them in industries where labor is in short supply and places restrictions on their transfer to other industries.</li>
<li>Imposing a Japanese language test on long-term residents who are eligible to stay in Japan may result in the loss of opportunities to recruit talented foreign personnel.</li>
<li>The government has been unable to step forward to "respect human rights and share diverse values.” If Japanese people do not change, we will never be able to embrace diversity.</li>
</ul>


The government only considers foreign personnel as labor force and accepts them in industries where labor is in short supply and places restrictions on their transfer to other industries.
Imposing a Japanese language test on long-term residents who are eligible to stay in Japan may result in the loss of opportunities to recruit talented foreign personnel.
The government has been unable to step forward to "respect human rights and share diverse values.” If Japanese people do not change, we will never be able to embrace diversity.


If We Don't Change the Way We Used to Do Things, We Cannot Embrace Diverse Values

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>There are 44 adds/41 deletes for the JPX Nikkei 400 Index to bring the number of index constituents back to 400. There are stocks with multiple days ADV to trade.</li>
<li>Based on the adds, deletes and capping changes, we estimate one way turnover of 7.9% and a round-trip trade of JPY 880bn (US$6bn).</li>
<li>The adds have outperformed the deletes over the last year though that has been faded over the last couple of months. Breaking with history, there could be outperformance near-term.</li>
</ul>


There are 44 adds/41 deletes for the JPX Nikkei 400 Index to bring the number of index constituents back to 400. There are stocks with multiple days ADV to trade.
Based on the adds, deletes and capping changes, we estimate one way turnover of 7.9% and a round-trip trade of JPY 880bn (US$6bn).
The adds have outperformed the deletes over the last year though that has been faded over the last couple of months. Breaking with history, there could be outperformance near-term.


JPX Nikkei 400 Index Rebalance: A Bunch of Chunky Adds & US$6bn Trade

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)

A New Type Of "Deemed Shareholding" Has Emerged!

I would like to discuss the issues on the June 20 Nikkei article, "SBI-affiliated cross-shareholding dissolution support fund to reach 100 billion...

Metrical Inc

Are We There Yet? What Next for Japanese Assets?

The change in trend in the JPY will shift investor sector preferences and benefit segments of Japan's economy through increased real incomes and...

Rikki Malik

Downgrading Japan; Stay Defensive; Downgrading Outlook on Global Equities $ACWI to Neutral

Downgrading Japan TOPIX, Nikkei; Stay Defensive; Downgrading Outlook on Global Equities $ACWI $EEM to Neutral; Many Risk-Off Signals increase odds...

Vermilion Research

If We Don't Change the Way We Used to Do Things, We Cannot Embrace Diverse Values

I would like to discuss the issues on the June 17 Nikkei article, " Training Work to Increase Motivation and Peace of Mind for Foreign Talent.”

Metrical Inc

JPX Nikkei 400 Index Rebalance: A Bunch of Chunky Adds & US$6bn Trade

There are 44 adds/41 deletes for the JPX Nikkei 400 Index resulting in a one-way turnover of 7.9% and a round-trip trade of JPY 880bn (US$6bn)....

Brian Freitas

A New Type Of "Deemed Shareholding" Has Emerged!

I would like to discuss the issues on the June 20 Nikkei article, "SBI-affiliated cross-shareholding dissolution support fund to reach 100 billion...

Metrical Inc

Are We There Yet? What Next for Japanese Assets?

​The change in trend in the JPY will shift investor sector preferences and benefit segments of Japan's economy through increased real incomes and...

Rikki Malik

Downgrading Japan; Stay Defensive; Downgrading Outlook on Global Equities $ACWI to Neutral

Downgrading Japan TOPIX, Nikkei; Stay Defensive; Downgrading Outlook on Global Equities $ACWI $EEM to Neutral; Many Risk-Off Signals increase odds...

Vermilion Research

If We Don't Change the Way We Used to Do Things, We Cannot Embrace Diverse Values

I would like to discuss the issues on the June 17 Nikkei article, " Training Work to Increase Motivation and Peace of Mind for Foreign Talent.”

Metrical Inc

JPX Nikkei 400 Index Rebalance: A Bunch of Chunky Adds & US$6bn Trade

There are 44 adds/41 deletes for the JPX Nikkei 400 Index resulting in a one-way turnover of 7.9% and a round-trip trade of JPY 880bn (US$6bn)....

Brian Freitas

The change in trend in the JPY will shift investor sector preferences and benefit segments of Japan's economy through increased real incomes and...