Category

ESG

Jan 29
0

Daily Brief ESG: Improved Governance Tends to Raise Reason to Buy Japanese Stocks when Corporate Profit Is Lackluster and more

By | Daily Briefs, ESG

In today’s briefing:

  • Improved Governance Tends to Raise Reason to Buy Japanese Stocks when Corporate Profit Is Lackluster

Improved Governance Tends to Raise Reason to Buy Japanese Stocks when Corporate Profit Is Lackluster

By Aki Matsumoto

  • Overseas investors have sold off heavily in Japanese equities since July, and it’ll interesting to see the trading trends in January, which will reflect their asset allocation for the year.
  • Overseas investors buy Japanese equities when they expect the management of Japanese companies to change and improve their profitability and growth potential.
  • Benchmark investors who have reduced their investment weighting in Japanese equities may return to their investment weighting if they expect a relative improvement in Japanese equity investment performance in 3Q.

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Jan 27
0

Daily Brief ESG: Is Slower Management Decision Making of Japanese Companies Relate to Slower Growth of Market Cap? and more

By | Daily Briefs, ESG

In today’s briefing:

  • Is Slower Management Decision Making of Japanese Companies Relate to Slower Growth of Market Cap?

Is Slower Management Decision Making of Japanese Companies Relate to Slower Growth of Market Cap?

By Aki Matsumoto

  • Declining components from MSCI indexes will lead to less inflows from active as well as passive funds, and less transmission from the sell-side to global investors.
  • Based on the assumption that the world’s top companies have grown in response to changes in the environment, Japanese companies may be relatively slow in making management decisions for growth.
  • As benchmark adopters reduce their investments in Japanese equities, investors adopting investment strategies that are less concerned with benchmarks will have a greater presence than ever before.

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Jan 25
0

Daily Brief ESG: ETF Sale Won’t Be Concluded Soon and more

By | Daily Briefs, ESG

In today’s briefing:

  • ETF Sale Won’t Be Concluded Soon, but as Long as BOJ Keeps Holding Them, the Problems Will Persist

ETF Sale Won’t Be Concluded Soon, but as Long as BOJ Keeps Holding Them, the Problems Will Persist

By Aki Matsumoto

  • Since dividend income and unrealized gains on ETFs have significant impact on BOJ’s finances, the sales of ETF will be discussed, considering BOJ’s overall balance sheet and income/expenses as well.
  • There’re unexamined issues, whether the central bank’s purchase of stocks was really good thing, whether it distorted the secondary market, and whether management reforms were delayed by underpinning the stocks.
  • BOJ can move on to the issue of ETF disposition when the impact of policy rate hikes is recognized and the market stabilizes, but until then the problems will persist.

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Jan 24
0

Daily Brief ESG: Hopefully and more

By | Daily Briefs, ESG

In today’s briefing:

  • Hopefully, CSDDD Mandates Will Advance Human Rights Efforts, the Weakest Area for Japanese Companies

Hopefully, CSDDD Mandates Will Advance Human Rights Efforts, the Weakest Area for Japanese Companies

By Aki Matsumoto

  • Many companies have established policies on human capital but haven’t yet implemented specific measures. Solving issues related to human capital is an area in which Japanese companies lag far behind.
  • With even the understanding of diversity within the company in jeopardy, it is unlikely to reach a solution to human rights in the supply chain.
  • Japanese companies have traditionally been active in investing in goods, but have been reluctant to invest in people. Many companies need to start with an understanding of people.

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Jan 23
0

Daily Brief ESG: Listing Criteria for the TSE Growth Market Is Expected to Be Raised Starting April 2026 and more

By | Daily Briefs, ESG

In today’s briefing:

  • Listing Criteria for the TSE Growth Market Is Expected to Be Raised Starting April 2026
  • HMM: Material Improvement in Corporate Value Up Plan

Listing Criteria for the TSE Growth Market Is Expected to Be Raised Starting April 2026

By Aki Matsumoto

  • TSE is likely to raise the current Growth Market listing criteria of at least 500 million yen in tradable equity market capitalization, probably starting in April 2026.
  • Since listing examinations are already being conducted with the new criteria in mind, IPO reserves are being prepared with a larger market capitalization than before.
  • It is unclear how much will be raised, but companies will prepare for listing by increasing its market capitalization through the use of the secondary market and M&A.

HMM: Material Improvement in Corporate Value Up Plan

By Douglas Kim

  • On 22 January, HMM Co., Ltd. (011200 KS) announced its new Corporate Value Up plan which included five major items.
  • They include higher shareholder returns, achieve average sales growth of 9% and ROE of 4% in the next three years, and improve communication with stakeholders and shareholders.
  • The company plans to implement total shareholder returns of at least 2.5 trillion won within one year, which represents 14.8% of its market cap. 

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Jan 21
0

Daily Brief ESG: Keppel Ltd: Part V – Transforming into a Global Asset Manager and more

By | Daily Briefs, ESG

In today’s briefing:

  • Keppel Ltd: Part V – Transforming into a Global Asset Manager

Keppel Ltd: Part V – Transforming into a Global Asset Manager

By Tan Yee Peng

  • Keppel’s Vision 2030, announced in May 2020, envisages that it would become a global asset manager and operator, with Funds Under Management (“FUM”) of S$200bn.
  • In this report we are focusing on Keppel’s private funds, which account for 70% of its current FUM.
  • Based on Keppel’s publicly released materials, Keppel’s strategy to reach their goal is separated into 3 key components.

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Jan 20
0

Daily Brief ESG: Going Private Is Not an “exit” from the Market and more

By | Daily Briefs, ESG

In today’s briefing:

  • Going Private Is Not an “exit” from the Market, but the Beginning of the Next Step

Going Private Is Not an “exit” from the Market, but the Beginning of the Next Step

By Aki Matsumoto

  • The previous share price of FUJISOFT did not reach the value it should have, and therefore, the company did not achieve its management goal of maximizing shareholder profit.
  • The decision for shareholder return or investment in growth rests with management. Cash returned to shareholders is simply invested by investors to find investments where they can earn better investment.
  • Rather than “shareholder pressure,” we should think this is the beginning of an effort to return to the basics of shareholder-oriented management, which is to expand shareholder interests.

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Jan 19
0

Daily Brief ESG: If Profits Cannot Grow and more

By | Daily Briefs, ESG

In today’s briefing:

  • If Profits Cannot Grow, Tokyo Market Will Be Full of PE and Activist Investors

If Profits Cannot Grow, Tokyo Market Will Be Full of PE and Activist Investors

By Aki Matsumoto

  • There do not seem to be many companies that have executed large one-time dividends that have subsequently grown in corporate value.
  • Now that the exit from deflationary economy is seen and profit margins have room to grow, the environment is conducive to investing in growth, and companies have opportunities to change.
  • Limited profit growth is making it easier for market risk-taking investors to leave. Unless companies can grow profitably, Tokyo market will be full of private equity funds and activist investors.

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Jan 18
0

Daily Brief ESG: Samsung Electronics: Revamping Executive Compensation to Include Stocks – Benchmarking TSMC and more

By | Daily Briefs, ESG

In today’s briefing:

  • Samsung Electronics: Revamping Executive Compensation to Include Stocks – Benchmarking TSMC

Samsung Electronics: Revamping Executive Compensation to Include Stocks – Benchmarking TSMC

By Douglas Kim

  • Samsung Electronics announced that it will revamp its executive compensation system to include treasury shares as incentives. Samsung has benchmarked TSMC in terms of paying treasury shares to its employees.
  • Samsung Electronics’ decision to revamp its executive compensation system to include treasury shares as incentives aligns the interests of the shareholders along with the company’s management.
  • Now that Samsung Electronics has incorporated stock based incentive system, it is likely that other Korean companies that could follow suit. 

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Jan 17
0

Daily Brief ESG: Raising Requirements for Shareholder Proposals Could Hinder the Shift to Value-Creating Management and more

By | Daily Briefs, ESG

In today’s briefing:

  • Raising Requirements for Shareholder Proposals Could Hinder the Shift to Value-Creating Management

Raising Requirements for Shareholder Proposals Could Hinder the Shift to Value-Creating Management

By Aki Matsumoto

  • Because the majority of companies are still unable to change themselves, both the government and the TSE have taken measures to expect engagement from institutional investors, including activist investors.
  • Japan has high barriers in areas that aren’t regulated by law. The existence of cross-shareholdings has allowed managers to continue to operate without respect for the interests of minority shareholders.
  • It is premature to raise the requirements for shareholder proposals and requests to call special meetings to the level of other countries when many companies are still protected by cross-shareholdings.

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