Category

ESG

Sep 11
0
Smartkarma The Investment Intelligence Platform

Daily Brief ESG: Simply Aiming to Reduce Cash on Hand Is Dangerous—a Shift in Mindset Is Needed and more

By | Daily Briefs, ESG

In today’s briefing:

  • Simply Aiming to Reduce Cash on Hand Is Dangerous—a Shift in Mindset Is Needed

Simply Aiming to Reduce Cash on Hand Is Dangerous—a Shift in Mindset Is Needed

By Aki Matsumoto

  • When shareholders have a certain degree of influence through voting rights, management should be expected to conduct operations with discipline and accountability through dialogue with shareholders.
  • Simply aiming to reduce cash reserves is risky. The problem with Japanese companies is a lack of awareness that mission is to maximize shareholder interest and sustainably grow corporate value.
  • This revision to the Corporate Governance Code may have given investors mixed signals regarding the ongoing formalization—and potential regression—of corporate governance at Japanese companies.

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Sep 09
0
Smartkarma The Investment Intelligence Platform

Daily Brief ESG: Public Financial (626 HK): HK$2.50/Share Will Get This Offer Over The Line and more

By | Daily Briefs, ESG

In today’s briefing:

  • Public Financial (626 HK): HK$2.50/Share Will Get This Offer Over The Line

Public Financial (626 HK): HK$2.50/Share Will Get This Offer Over The Line

By David Blennerhassett

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Sep 08
0
Smartkarma The Investment Intelligence Platform

Daily Brief ESG: Japanese Stocks’ Low Trading Liquidity Has Adversely Affected Management’s Shift To Value Creation and more

By | Daily Briefs, ESG

In today’s briefing:

  • Japanese Stocks’ Low Trading Liquidity Has Adversely Affected Management’s Shift To Value Creation

Japanese Stocks’ Low Trading Liquidity Has Adversely Affected Management’s Shift To Value Creation

By Aki Matsumoto

  • A more direct way to resolve management challenges is to address the structural issue of trading liquidity being significantly lower than market capitalization and thereby attract attention of global investors.
  • Companies should strive to resolve cross-shareholdings promptly. Prompt elimination of parent-subsidiary listings—in the broad sense—will lead to improved profitability for both the parent company and its affiliates.
  • This structural issue is the reason why companies that wish to continue operating based on traditional values are still able to hold a majority of voting rights.

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Sep 06
0
Smartkarma The Investment Intelligence Platform

Daily Brief ESG: This Revision to Corporate Governance Codes Could Be Perceived as Defending Outdated Practices and more

By | Daily Briefs, ESG

In today’s briefing:

  • This Revision to Corporate Governance Codes Could Be Perceived as Defending Outdated Practices

This Revision to Corporate Governance Codes Could Be Perceived as Defending Outdated Practices

By Aki Matsumoto

  • With the unwinding of cross-shareholdings now irreversible, the company is keen to maintain its defensive stance. This defensive stance is aimed at managing the shareholders’ meeting.
  • 81% of companies with fiscal years ending in March held their AGMs over a four-day period in late June, while only 1.6% of AGMs allowed for online questions and voting.
  • While calls for AGM disclosures in annual securities reports were expected to help break with past conventions, only two companies changed record dates to postpone AGM dates to July.

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Sep 04
0
Smartkarma The Investment Intelligence Platform

Daily Brief ESG: Companies that Fail to Be Accountable Raise Concerns About Their Fulfillment of Management Goals and more

By | Daily Briefs, ESG

In today’s briefing:

  • Companies that Fail to Be Accountable Raise Concerns About Their Fulfillment of Management Goals

Companies that Fail to Be Accountable Raise Concerns About Their Fulfillment of Management Goals

By Aki Matsumoto

  • The number of days before AGM a company discloses its annual securities report serves as a litmus test of whether it is conducting management that is accountable to its shareholders.
  • An activist investor’s shareholder proposal to change the record date to address the pre-AGM disclosure in annual securities reports and the concentration of AGM dates is indeed the right proposal.
  • This reluctance to engage with shareholders is believed to be the reason why capital profitability—an indicator of growth in shareholder value—is not increasing.

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Sep 03
0
Smartkarma The Investment Intelligence Platform

Daily Brief ESG: Companies with Major Shareholders Holding over 40% Stake Account for 30% of All Listed Companies and more

By | Daily Briefs, ESG

In today’s briefing:

  • Companies with Major Shareholders Holding over 40% Stake Account for 30% of All Listed Companies

Companies with Major Shareholders Holding over 40% Stake Account for 30% of All Listed Companies

By Aki Matsumoto

  • The disclosure rules begin as a compromise in response to concerns regarding the burden on listed companies and investor needs. However, it remains unclear what impact these rules will have.
  • Since there are so many companies with major shareholders,this means that while there are challenges regarding trading liquidity, there are also many investment opportunities.
  • Institutional investors are expected to discuss with the company the future direction of its listing in a way that promotes the sustainable growth of minority shareholders’ interests.

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Sep 01
0
Smartkarma The Investment Intelligence Platform

Daily Brief ESG: What Are the Reasons Japanese Companies Cannot Overcome the Drawbacks of Traditional Management? and more

By | Daily Briefs, ESG

In today’s briefing:

  • What Are the Reasons Japanese Companies Cannot Overcome the Drawbacks of Traditional Management?

What Are the Reasons Japanese Companies Cannot Overcome the Drawbacks of Traditional Management?

By Aki Matsumoto

  • What are the reasons Japanese companies cannot overcome the drawbacks of traditional management?
  • In Japan, the concept of fiduciary duty is generally not widely understood, but institutional investors must fulfill their accountability to beneficiaries just as much as management does.
  • Consequently, AGMs remained concentrated at late June, making it physically difficult to attend, and since annual securities reports couldn’t be used as a basis for decision-making, virtually nothing has changed.

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Aug 29
0
Smartkarma The Investment Intelligence Platform

Daily Brief ESG: The Bank of Japan Should Also Accelerate Its ETF Sales “to Avoid Impacting the Market” and more

By | Daily Briefs, ESG

In today’s briefing:

  • The Bank of Japan Should Also Accelerate Its ETF Sales “to Avoid Impacting the Market”

The Bank of Japan Should Also Accelerate Its ETF Sales “to Avoid Impacting the Market”

By Aki Matsumoto

  • Japan’s stocks are notable for low trading liquidity due to relatively small market capitalization and skewed investor-base. Many companies have major shareholders, and BoJ’s ETF further limit the free-floating shares.
  • Trends in derivative positions—such as the “gamma squeeze” strategy—that utilize the Nikkei 225, which includes stocks with low trading liquidity, are further amplifying the magnitude of market volatility.
  • The BoJ’s ETF holdings pose a major problem in corporate governance, perspective and it should now accelerate the sale of ETFs to ensure trading liquidity and “avoid impacting the market.”

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Aug 27
0
Smartkarma The Investment Intelligence Platform

Daily Brief ESG: Isn’t the Debate over the Amendment to the Companies Act Failing to Learn from past Mistakes? and more

By | Daily Briefs, ESG

In today’s briefing:

  • Isn’t the Debate over the Amendment to the Companies Act Failing to Learn from past Mistakes?

Isn’t the Debate over the Amendment to the Companies Act Failing to Learn from past Mistakes?

By Aki Matsumoto

  • Regulators have established a legal framework for listed companies based on the belief that improving corporate governance practices leads to improved return on capital and better stock price performance.
  • Even regulators have recently begun requiring companies to take Key Actions to improve capital profitability and stock valuations, through “TSE’s request” and this year’s revision of Corporate Governance Code.
  • A company should be evaluated based on the results of its value creation, such as capital profitability and stock performance. The board practice is one factor that should be analyzed.

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Aug 26
0
Smartkarma The Investment Intelligence Platform

Daily Brief ESG: More Companies Are Introducing Shareholder Benefits Without Addressing Concerns About Fairness and more

By | Daily Briefs, ESG

In today’s briefing:

  • More Companies Are Introducing Shareholder Benefits Without Addressing Concerns About Fairness

More Companies Are Introducing Shareholder Benefits Without Addressing Concerns About Fairness

By Aki Matsumoto

  • As cross-shareholding structure begins to break down and concerns grow over the influence of activist investors, an increasing number of companies are introducing shareholder benefits to win over individual shareholders.
  • Some believe that having more individual investors not only helps limit declines—particularly during market downturns—but also lowers the cost of capital. However, it’s unclear whether shareholder benefits are effective.
  • Retail investors aren’t the only diverse investors. Institutional investors also engage in a variety of investment strategies, and repurchasing treasury stock is an effective way to reduce stock price volatility.

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