Daily BriefsJapan

Japan: Serverworks, CyberAgent Inc and more

In today’s briefing:

  • TOPIX Inclusion: Serverworks (4434 JP):  Clouds in a BLUE Sky
  • Japan Governance – Diversity Matters

TOPIX Inclusion: Serverworks (4434 JP):  Clouds in a BLUE Sky

By Janaghan Jeyakumar, CFA

On Friday after market-close, Tokyo-based cloud integration company Serverworks (4434 JP) announced (J-only) they had received approval to move from the MOTHERS Section to the First Section of the Tokyo Stock Exchange as of 15th January 2021.

TSE1 reassignment triggers inclusion into the TOPIX Index and the Inclusion Event can be expected to be at the close of trading 25th February 2021.

Serverworks provides Amazon Web Services (AWS) based cloud integration services to corporate clients in Japan. They help companies transition from conventional on-premise information systems where companies own and operate their own information equipment and software to cloud-based solutions where a third party service provider (Amazon.com Inc (AMZN US) in the case of AWS) invests in equipment and software and charges users typically on a pay-as-you-go basis depending on the level of usage.  

In this insight, we take a look at the Index Inclusion Parameters and the Fundamentals of the company to evaluate the upside potential of the TOPIX Inclusion Event. 

Japan Governance – Diversity Matters

By Mark Chadwick

There has been growing awareness of the business case for inclusion and diversity (I&D) in the workplace. In Japan, Prime Minister Suga has pledged continued government support for corporate governance reform and he would like to see more women and foreigners in key positions. While many companies cite I&D as a source of competitive advantage and a key enabler of growth, few academic studies have been able to prove a direct link between I&D and financial performance. Our analysis on Japan’s larger companies suggests the following: 

  1. Most Japanese companies have very low levels of diversity. Although the participation of women on the boards of Japanese companies is expanding, those with higher levels of diversity are yet to see any improvement in financial metrics or stock performance.  

  1. Our broad composite index of board entrenchment also bears little correlation with key metrics. However, boards that are younger on average do appear to be more effective, and are correlated with a broad range of operating metrics.  

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