Category

ESG

Apr 17
0

Daily Brief ESG: Activist Investors Will Focus Their Approach More on Whole Assets that Aren’t Being Used Effectively and more

By | Daily Briefs, ESG

In today’s briefing:

  • Activist Investors Will Focus Their Approach More on Whole Assets that Aren’t Being Used Effectively

Activist Investors Will Focus Their Approach More on Whole Assets that Aren’t Being Used Effectively

By Aki Matsumoto

  • It’ll be interesting on whether shareholder proposals will be passed in companies with larger market capitalization and larger institutional investor ownership, which will be the main battleground for activist investors.
  • There are so many companies that are not creating the value they should be, it is no wonder that any company becomes a target for activist investors.
  • As activist funds’ AUM grows, their approach is likely to focus more on overall assets that are not being used effectively, such as cash, real estate, equities, and non-core businesses.

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Apr 15
0

Daily Brief ESG: Attention Should Be Paid to Whether the Pseudo Cross-Shareholdings Will Hinder Management Reform and more

By | Daily Briefs, ESG

In today’s briefing:

  • Attention Should Be Paid to Whether the Pseudo Cross-Shareholdings Will Hinder Management Reform

Attention Should Be Paid to Whether the Pseudo Cross-Shareholdings Will Hinder Management Reform

By Aki Matsumoto

  • An increasing number of companies had eliminated shareholder benefit plans, but reducing cross-shareholdings and caution toward activist investors may have been the motivating factors in the reversal of this trend.
  • If managers distract from management reform by gaining the support of individual investors through shareholder benefits, the stock benefit program will become a pseudo cross-shareholding.
  • Shareholder benefit programs and shareholder returns cannot be compared in the same manner. Companies shouldn’t underestimate the fact that the problem with this lies in “principle of equality of shareholders.”

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Apr 13
0

Daily Brief ESG: Effectiveness of MBO Special Committee Is Linked to Effectiveness of Independent Directors and more

By | Daily Briefs, ESG

In today’s briefing:

  • Effectiveness of MBO Special Committee Is Linked to Effectiveness of Independent Directors

Effectiveness of MBO Special Committee Is Linked to Effectiveness of Independent Directors

By Aki Matsumoto

  • The key is whether the effectiveness of special committee can fairly guide MBO, but whether the independent outside directors are truly independent, properly informed, and skilled is an important assumption.
  • Since companies with high foreign shareholdings generally have higher corporate governance practices, there are concerns about practices in MBO cases for many companies that do not have high foreign shareholdings.
  • When a company whose “goal is IPO” conducts MBO when the stock price is lower than at IPO, there are concerns about whether the special committee will guide MBO fairly.

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Apr 11
0

Daily Brief ESG: Can Growth Market Reform Succeed in a Structure of Interdependence of IPO Ecosystem Stakeholders? and more

By | Daily Briefs, ESG

In today’s briefing:

  • Can Growth Market Reform Succeed in a Structure of Interdependence of IPO Ecosystem Stakeholders?

Can Growth Market Reform Succeed in a Structure of Interdependence of IPO Ecosystem Stakeholders?

By Aki Matsumoto

  • TSE seems reluctant to raise the market capitalization criteria for listing on Growth Market, but wants to encourage management to grow after IPO by raising the criteria for maintaining listing.
  • The reason why companies don’t grow after IPO is that IPOs are often conducted for tax savings for founders and for other reasons without any intention to grow.
  • It is questionable whether the new listing maintenance criteria will help these companies grow and whether the verbal intervention in the listing review process will be successful.

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Apr 09
0

Daily Brief ESG: Companies May Worked on Raising OP Margin in Minor Ways Without Working on Raising Gross Margins and more

By | Daily Briefs, ESG

In today’s briefing:

  • Companies May Worked on Raising OP Margin in Minor Ways Without Working on Raising Gross Margins

Companies May Worked on Raising OP Margin in Minor Ways Without Working on Raising Gross Margins

By Aki Matsumoto

  • Japan’s declining % global GDP and the number of top companies in market capitalization shows that simply boosting profits through yen depreciation left behind the growth speed of global competitors.
  • While many Japanese companies tried to improve profit margins by reducing labor costs and other expenses, few have managed to improve gross profit margins, which relate to their business models.
  • The fact that few companies have taken steps to shift to higher value-added products and services is why the yen rate remains a key factor in stock valuations.

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Apr 07
0

Daily Brief ESG: President Yoon’s Impeachment: Impact on Korean Capital Markets and more

By | Daily Briefs, ESG

In today’s briefing:

  • President Yoon’s Impeachment: Impact on Korean Capital Markets
  • Political Problems Are Preventing a Solution to the Problem of Declining Birthrates

President Yoon’s Impeachment: Impact on Korean Capital Markets

By SUSTINVEST

  • On April 4, 2025 (KST), South Korea’s Constitutional Court formally removed former President Yoon Suk Yeol from office in accordance with the constitutional order.
  • This decision is expected to significantly reduce political uncertainty. However, external factors such as the U.S. government’s reciprocal tariff policies will continue to have substantial impact on Korean markets.
  • June’s presidential election favors government change. Global investors should watch the Democratic Party’s capital market reform proposals.

Political Problems Are Preventing a Solution to the Problem of Declining Birthrates

By Aki Matsumoto

  • Eliminating income limits on child allowances seems to be the right policy because the wealthier families have more children. However, it lacks viewpoints toward the growing number of unmarried people.
  • It seems effective to solve the problem of the growing income disparity and the child-rearing/housework being disproportionately placed on women, and taking appropriate measures for those who desire diverse lifestyles.
  • Policies don’t reach the ever-increasing number of singles. Rather than solutions to declining birthrate, priority is given to policies that distribute money to those who are more certain to vote.

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Apr 05
0

Daily Brief ESG: It’s Not a Lack of Analyst Coverage that Is Causing the Lack of Trading….. and more

By | Daily Briefs, ESG

In today’s briefing:

  • It’s Not a Lack of Analyst Coverage that Is Causing the Lack of Trading…..

It’s Not a Lack of Analyst Coverage that Is Causing the Lack of Trading…..

By Aki Matsumoto

  • 70% of Tokyo market is traded by overseas investors, so even companies with smaller market capitalization need to catch the attention of overseas investors by increasing their return on capital.
  • It is possible that the difference in stock valuations over the past few years has been due to a greater difference in return on capital between large-cap and small-cap stocks.
  • Skillful IR alone is not enough to raise stock price valuations. The IR department must have management who can execute management strategies and personnel who can formulate persuasive plans.

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Apr 04
0

Daily Brief ESG: Now Is the Time to Turn the Slowdown in Profit Growth into an Opportunity and more

By | Daily Briefs, ESG

In today’s briefing:

  • Now Is the Time to Turn the Slowdown in Profit Growth into an Opportunity

Now Is the Time to Turn the Slowdown in Profit Growth into an Opportunity

By Aki Matsumoto

  • The profit outlook for many Japanese companies may not be good enough for overseas investors, who are selecting the best investments from among stocks around the world.
  • In FY2025, both sales and recurring profit are expected to slow in the manufacturing sector. This casts a shadow over TSE stock prices, which are dominated by manufacturing companies.
  • Companies whose corporate performance are at a standstill has good opportunity to show investors how it will use the proceeds from the sale of cross-held shares to expand corporate value.

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Apr 01
0

Daily Brief ESG: The Toyota Way Is Not to Rush and more

By | Daily Briefs, ESG

In today’s briefing:

  • The Toyota Way Is Not to Rush, but to Gain a Foothold and Proceed with Caution

The Toyota Way Is Not to Rush, but to Gain a Foothold and Proceed with Caution

By Aki Matsumoto

  • It’s unlikely that the transition to ‘company with audit committee’ will enhance the supervisory function, but it’s likely to speed up the decision-making process by delegating authority to executive directors.
  • Instead of achieving 30% female board member and moving to Company with US-type 3 Committees at once, Toyota will implement Toyota’s way firmly with BOD that is half independent directors.
  • The only way for Toyota, which faces several governance challenges, to uphold tradition of Toyoda family being at the top of management is to make the returns expected by investors.

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Mar 30
0

Daily Brief ESG: Aiming for REITs with Lower Downside Risk and Expectations of Higher Shareholder Returns? and more

By | Daily Briefs, ESG

In today’s briefing:

  • Aiming for REITs with Lower Downside Risk and Expectations of Higher Shareholder Returns?

Aiming for REITs with Lower Downside Risk and Expectations of Higher Shareholder Returns?

By Aki Matsumoto

  • REITs, whose main players are regional banks that invest as a bond alternative, tend to stop their market decline when the spread with JGB yields approaches 400 basis points.
  • While there is certainly room for REITs to strengthen shareholder returns, the possibility that domestic investors may want stable dividends cannot be denied.
  • Other activist investors are watching with interest to see if the shareholder activism approach works in REITs as well, but the main battleground is still listed equities.

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