Category

ESG

Dec 31
0

Daily Brief ESG: Financial Disclosures During Trading Hours Was Disappointing in 2Q and more

By | Daily Briefs, ESG

In today’s briefing:

  • Financial Disclosures During Trading Hours Was Disappointing in 2Q, but Will Increase Gradually

Financial Disclosures During Trading Hours Was Disappointing in 2Q, but Will Increase Gradually

By Aki Matsumoto

  • Comparing the disclosure time of 2Q financial statements to a year ago, the extension of trading hours has had an impact on the disclosure time of companies.
  • After November 5, when trading hours were extended, 31.6% of companies disclosed by 3:29 p.m. The remaining 68.4% moved down their disclosure time.
  • The 2Q results didn’t include companies that were proactive about early disclosure, and it is expected that some of the more cautious companies will switch to disclosure during trading hours.

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Dec 29
0

Daily Brief ESG: There Are Still Very Many Companies with High Cash on Hand Relative to Sales and more

By | Daily Briefs, ESG

In today’s briefing:

  • There Are Still Very Many Companies with High Cash on Hand Relative to Sales

There Are Still Very Many Companies with High Cash on Hand Relative to Sales

By Aki Matsumoto

  • Of course, it’s desirable to be able to use cash to find effective investments, but it is important to return cash on hand with an immediate impact on ROE improvement.
  • Looking at all listed companies, there are a great many companies that have a large amount of cash on hand relative to sales.
  • Denso’s measures to reduce policy shareholdings plus share buybacks will directly improve ROE, even if the background was a desire to stem the rise in foreign shareholdings.

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Dec 28
0

Daily Brief ESG: Dividend Procedure Improvement Plan in Compliance with Global Standards Is Passed into Law and more

By | Daily Briefs, ESG

In today’s briefing:

  • Dividend Procedure Improvement Plan in Compliance with Global Standards Is Passed into Law

Dividend Procedure Improvement Plan in Compliance with Global Standards Is Passed into Law

By Douglas Kim

  • Amid chaos in Korean politics (including impeachment of the Acting President Han Duck Soo), the FSC announced that the change in the procedure for quarterly dividends was passed into law.
  • The main change that has been made is that the the investors will know in advance how much they will receive in quarterly dividends. 
  • Amid market turmoil, numerous high dividend paying stocks such as Hankook & Company, HD Hyundai, and KT Corp have been outperforming the market this year. 

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Dec 27
0

Daily Brief ESG: Will the Timing of the BOJ ETF Exit Be Revealed in December? and more

By | Daily Briefs, ESG

In today’s briefing:

  • Will the Timing of the BOJ ETF Exit Be Revealed in December?

Will the Timing of the BOJ ETF Exit Be Revealed in December?

By Aki Matsumoto

  • The actual ratio of tradable shares, excluding ETFs held by BoJ, is low, as a result, the number of Japanese equities available for investment by large institutional investors is limited.
  • ETFs owned by BoJ may be treated as being in favor of company-proposed proposals and against shareholder-proposed proposals, thus BOJ-owned ETFs are hindering the improvement of corporate governance.
  • It is good that BoJ has begun to consider an exit from ETFs, but with several variables and unknowns, it is not easy for investors to predict the timing.

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Dec 25
0

Daily Brief ESG: Change in Regulation of Treasury Shares Allocation Post Spinoffs Starting January 2025 and more

By | Daily Briefs, ESG

In today’s briefing:

  • Change in Regulation of Treasury Shares Allocation Post Spinoffs Starting January 2025

Change in Regulation of Treasury Shares Allocation Post Spinoffs Starting January 2025

By Douglas Kim

  • Starting January 2025, there will be a major change in the regulation regarding the use of treasury shares during a company spinoff process.
  • The main change involves the practice of allocating newly issued shares to existing treasury shares held by companies during corporate spinoffs. 
  • This practice will now be banned which should help to reduce the wrongful use of treasury shares and improve minority shareholders’ rights. 

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Dec 24
0

Daily Brief ESG: Is the High Volatility of Japanese Equities Only Due to Their Small Market Capitalization? and more

By | Daily Briefs, ESG

In today’s briefing:

  • Is the High Volatility of Japanese Equities Only Due to Their Small Market Capitalization?
  • New Corporate Value Up Plans of POSCO Holdings and POSCO International

Is the High Volatility of Japanese Equities Only Due to Their Small Market Capitalization?

By Aki Matsumoto

  • In addition to many manufacturing companies that are sensitive to economic cycles, TSE is also characterized by many companies with sluggish operating cash flow growth.
  • Low interest rates in Japan can also be a factor in high volatility. As the volatility of low interest rates increases, corporate value volatility is likely to increase as well.
  • Some overseas investors pay attention to the equity spread over JGB yields. As the risk of rising interest rates in Japan increases, they are likely to unwind their futures positions.

New Corporate Value Up Plans of POSCO Holdings and POSCO International

By Douglas Kim

  • Both POSCO Holdings (005490 KS) and Posco International Corporation (047050 KS) provided solid, new Corporate Value Up reports. 
  • However, POSCO International’s plan is much better. POSCO International plans to provide total shareholder returns of 50% which is more than double of its previous total shareholder return plan.
  • This sharp increase in shareholder returns is likely to lead to share outperformance of POSCO International relative to the market in the next several months. 

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Dec 22
0

Daily Brief ESG: Companies Have Begun to Be Aware of Cash Flow and more

By | Daily Briefs, ESG

In today’s briefing:

  • Companies Have Begun to Be Aware of Cash Flow, but the Reality Is that It Doesn’t Produce Results

Companies Have Begun to Be Aware of Cash Flow, but the Reality Is that It Doesn’t Produce Results

By Aki Matsumoto

  • Operating income and depreciation, the components of operating cash flow, have been sluggish. This has undeniably dampened expectations for expanding corporate value.
  • Many companies have begun to be aware of cash flow, but have yet to see results. They are at the stage of producing results by selecting business to invest cash.
  • In terms of “not being conscious of cash flow,” shareholder returns are still strongly net income oriented and not cash flow oriented.

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Dec 20
0

Daily Brief ESG: The Impact of the 2025 Revision of the Stewardship Code Is … and more

By | Daily Briefs, ESG

In today’s briefing:

  • The Impact of the 2025 Revision of the Stewardship Code Is …

The Impact of the 2025 Revision of the Stewardship Code Is …

By Aki Matsumoto

  • For investors, it is a step forward to lower the hurdles for collaborative engagement, and for institutional investors, it is a step forward to reduce costs. 
  • It is hoped that passive funds, which have been reluctant to engage in engagement due to cost, will take a more positive approach.
  • Rule amendments to make it easier to identify substantial shareholders are expected to be negotiated in advance with substantial shareholders prior to voting.

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Dec 18
0

Daily Brief ESG: Shareholder Activism Plays a Significant Role in Companies that Are Slow to Change and more

By | Daily Briefs, ESG

In today’s briefing:

  • Shareholder Activism Plays a Significant Role in Companies that Are Slow to Change

Shareholder Activism Plays a Significant Role in Companies that Are Slow to Change

By Aki Matsumoto

  • Shareholder activism approaches include those seeking to resolve balance sheet issues, those targeting governance practices, those seeking to restructure business portfolios, and those seeking to improve business profitability.
  • In approaches that call for business strategy reform, shareholders may require the company to establish a special committee, including outside directors and outside experts, to discuss solutions to issues.
  • The discussions of “Strategy Committee” can significantly alter the shape of a company. Since few managers manage to evolve with changes in business environment, shareholder activism plays a significant role.

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Dec 16
0

Daily Brief ESG: The Situation Is Different for REITs that Rely on Capital Increase and more

By | Daily Briefs, ESG

In today’s briefing:

  • The Situation Is Different for REITs that Rely on Capital Increase, Despite the Same Low P/B Issue

The Situation Is Different for REITs that Rely on Capital Increase, Despite the Same Low P/B Issue

By Aki Matsumoto

  • Repurchasing investment units, increasing dividends through property sales, and increasing EPS through negative goodwill of M&A seem to be the share price raising measures necessary for capital increase for growth.
  • When increasing capital amid stagnated REIT stock prices, it’s questionable whether the picture that is drawn after capital increase is reasonable in the face of rising required returns by investors.
  • When the profitability of REIT investment companies is in question, it is not surprising that activist investors will focus on management issues, including cost of capital or corporate governance.

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