Executive Director, Metrical Inc

Aki Matsumoto

Executive Director

Independent Leading Corporate Governance Research

Metrical Inc

METRICAL INC. is an independent leading Corporate Governance research firm in Japan where Corporate Governance is increasingly recognized as an important element on corporate management in these days. Thus, CG research and solutions would become an essential component of global capital markets and play important to contribute to transparency of the markets and maximize shareholders’ value in Japan. 

METRICAL INC. provides Corporate Governance research and analysis including rating services, and  also offers investment research and IR services with solutions and customized profound research on CG and IR issues.

<ul>
<li>If discussion doesn't proceed from the starting point that respect for rights should be for the coexistence of humankind, not for the maintenance of corporate activities, it will get confused.</li>
<li>Although human rights were included in the 2021 revision of the Corporate Governance Code in the Principles of Sustainability, it is not thought to have been effective.</li>
<li>The repeated human rights violation scandals at companies and the fact that these companies have human rights policies in place infers that this is a deeply rooted problem in society.</li>
</ul>


If discussion doesn't proceed from the starting point that respect for rights should be for the coexistence of humankind, not for the maintenance of corporate activities, it will get confused.
Although human rights were included in the 2021 revision of the Corporate Governance Code in the Principles of Sustainability, it is not thought to have been effective.
The repeated human rights violation scandals at companies and the fact that these companies have human rights policies in place infers that this is a deeply rooted problem in society.


The Resolution of Human Rights Issues Should Not Be a Means to a Purpose

<ul>
<li>Neither the company nor the employees have made sufficient investments, despite the fact that both sides see a gap between the skills they need and the reality.</li>
<li>Many companies either fail to link their management strategy to their human capital investment and human resource strategy, or don't have a clear policy for human capital investment.</li>
<li>If investment in human resources is curbed in order to maintain short-term profit margins, this will lead to weighing on growth potential and profit margins in the medium-to-long term.</li>
</ul>


Neither the company nor the employees have made sufficient investments, despite the fact that both sides see a gap between the skills they need and the reality.
Many companies either fail to link their management strategy to their human capital investment and human resource strategy, or don't have a clear policy for human capital investment.
If investment in human resources is curbed in order to maintain short-term profit margins, this will lead to weighing on growth potential and profit margins in the medium-to-long term.


Recognizing Human Resource Strategy as a Management Issue and Creating the Policy Is the First Step

<ul>
<li>Companies had expected detailed rules, as with various disclosure documents, but was puzzled by government's guidelines, which were conceptual and didn't provide guidance on what to disclose and how much.</li>
<li>It is likely that the disclosure in annual securities reports, which are legal documents, will fill the space by disclosing items that are specifically identified and easy to show quantitatively.</li>
<li>Companies that cannot clearly explain their policies on investment in human capital and human resource strategies in their management strategies are unlikely to attract human resources.</li>
</ul>


Companies had expected detailed rules, as with various disclosure documents, but was puzzled by government's guidelines, which were conceptual and didn't provide guidance on what to disclose and how much.
It is likely that the disclosure in annual securities reports, which are legal documents, will fill the space by disclosing items that are specifically identified and easy to show quantitatively.
Companies that cannot clearly explain their policies on investment in human capital and human resource strategies in their management strategies are unlikely to attract human resources.


Companies Should Communicate Their Human Resources Strategy Rather than Detailed Disclosure Rules

<ul>
<li>Given the increased stock market volatility, it's not surprising that activist investment strategies are a good fit for investors seeking investment strategies that are less correlated with stock market fluctuations.</li>
<li>Japanese companies that have lower valuations, less effective steps to maximize their corporate value, and face many challenges in their governance practices are are well suited to activist investor approach.</li>
<li>Unlike passive investors who have an impact on the overall stock market, activist investors' purchases will have a limited impact on the overall market, but their presence will be significant.</li>
</ul>


Given the increased stock market volatility, it's not surprising that activist investment strategies are a good fit for investors seeking investment strategies that are less correlated with stock market fluctuations.
Japanese companies that have lower valuations, less effective steps to maximize their corporate value, and face many challenges in their governance practices are are well suited to activist investor approach.
Unlike passive investors who have an impact on the overall stock market, activist investors' purchases will have a limited impact on the overall market, but their presence will be significant.


Activist Investors Will Grow Their Presence, as Japanese Equities Would Be Good Fit for The Approach

Pan-Asia Index Flows & Special Situations, Quiddity Advisors

Janaghan Jeyakumar, CFA

Pan-Asia Index Flows & Special Situations

Quiddity Advisors

Pan-Asia Catalysts/Events

Event-Driven

<ul>
<li>Quiddity's "Who is Ready" series of insights aims to objectively identify names listed on the Tokyo Stock Exchange that are potential additions to the TOPIX Index in future.</li>
<li>This insight is a follow-up to <a href="https://www.smartkarma.com/insights/topix-inclusions-who-is-ready-aug-2022" target="_blank" data-smartkarma-citation="insights:74615" rel="noopener">TOPIX Inclusions: Who Is Ready (Aug 2022)</a> </li>
<li>At present, there are 53 names that satisfy all of these conditions and there are more names that are close to being in that group.</li>
</ul>


Quiddity's "Who is Ready" series of insights aims to objectively identify names listed on the Tokyo Stock Exchange that are potential additions to the TOPIX Index in future.
This insight is a follow-up to TOPIX Inclusions: Who Is Ready (Aug 2022) 
At present, there are 53 names that satisfy all of these conditions and there are more names that are close to being in that group.


TOPIX Inclusions: Who Is Ready (Oct 2022)

Japan

The TOPIX, also known as the Tokyo Stock Price Index, is a capitalization-weighted index of all companies listed on the First Section of the Tokyo Stock Exchange. The index is supplemented by the subindices of the 33 industry sectors. The index calculation excludes temporary issues and preferred stocks, and has a base value of 100 as of January 4, 1968.

TSE Tokyo Price Index TOPIX (TPX INDEX)

The Resolution of Human Rights Issues Should Not Be a Means to a Purpose

I would like to discuss the issues related to human rights on the Nikkei article, " Companies Urge Responses to Human Rights Issues."

Metrical Inc

Recognizing Human Resource Strategy as a Management Issue and Creating the Policy Is the First Step

I would like to discussed the issues related to the human capital investment on the Nikkei article, "MHLW Formulates Guidelines for Relearning."

Metrical Inc

Companies Should Communicate Their Human Resources Strategy Rather than Detailed Disclosure Rules

I would like to discuss the issues on the Nikkei article, "Human Capital Disclosure Guidelines Presented, but Companies Want Detailed Rules on...

Metrical Inc

Activist Investors Will Grow Their Presence, as Japanese Equities Would Be Good Fit for The Approach

I would like to discuss the points raised in the Nikkei article, "Autumn is the season for stock picking, and activists are flocking to small- and...

Metrical Inc

TOPIX Inclusions: Who Is Ready (Oct 2022)

Appier Group, ArtSpark Holdings, and Chubu Steel Plate are interesting TOPIX Inclusion Pre-event names that are worth tracking over the next few...

Janaghan Jeyakumar, CFA