Technical Analyst, Vermilion Research

Joe Jasper

Technical Analyst

Technical and Quantitative Research

Vermilion Research

Vermilion’s objective is to deliver timely, actionable, and unique technical research to professional investors through the application of our various technical indicators.

Our research strategists seek to highlight securities which we believe are at major inflection points, based on our various technical and quantitative indicators, and offer asymmetric risk/return profiles. Our unique research methodology, centered on relative strength, enables our strategists to deliver superior investment recommendations.

Our process begins by organizing the universe of actively traded stocks into discrete sectors, then into industry groups. We then apply our technical and quantitative tools to identify developing price trends. Once attractive trends are identified within a selected sector or group, we screen for individual stocks which we believe offer the best risk/reward profile. We provide a historical perspective that often reveals, through our long-term charts, how price patterns often repeat themselves over time.

Technical Analysis

<ul>
<li>The theme we have seen over the past four weeks is an increasing number of indexes reversing 4-10-month downtrends and/or breaking above important resistance levels, with no failed breakouts.</li>
<li>We continue to believe that global equities are going through a bottoming process, but the real test will come during the eventual pullback, which we believe we are now experiencing.</li>
<li>We are watching to see whether these breakout levels and important moving averages (e.g., 50-day MAs) will hold.</li>
</ul>


The theme we have seen over the past four weeks is an increasing number of indexes reversing 4-10-month downtrends and/or breaking above important resistance levels, with no failed breakouts.
We continue to believe that global equities are going through a bottoming process, but the real test will come during the eventual pullback, which we believe we are now experiencing.
We are watching to see whether these breakout levels and important moving averages (e.g., 50-day MAs) will hold.


Japan Among the Latest to Break Out; Buy Ideas in Growth/Cyclicals and Consumer Staples

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>The listing criteria regarding trading volume is much simpler than other criteria. It's clear that an average daily trading value of 20 million yen isn't sufficient liquidity for many investors.</li>
<li>Many companies that fail to meet listing standards have low expectations for future cash flows, which leads to low valuations and is the reason for sluggish trading volume.</li>
<li>Keeping these companies in prime market is expected to lead to more focus on this issue, as the gap between these companies and their exact opposites will widen further.</li>
</ul>


The listing criteria regarding trading volume is much simpler than other criteria. It's clear that an average daily trading value of 20 million yen isn't sufficient liquidity for many investors.
Many companies that fail to meet listing standards have low expectations for future cash flows, which leads to low valuations and is the reason for sluggish trading volume.
Keeping these companies in prime market is expected to lead to more focus on this issue, as the gap between these companies and their exact opposites will widen further.


Interest Will Be Focused on when the TSE Will Begin Cleaning up the Prime Market

<ul>
<li>For the majority of companies applying the measures, the market capitalization in circulation is less than 10 billion yen, which is the reason for not meeting the listing criteria.</li>
<li>The only solution to this problem is to raise the stock price, which can only be done either by improving profits or by raising the expectation on the future profits.</li>
<li>It won't be long before the time comes when the criteria will be questioned in the first place, whether tradable market capitalization of 10 billion yen is sufficiently liquid investment.</li>
</ul>


For the majority of companies applying the measures, the market capitalization in circulation is less than 10 billion yen, which is the reason for not meeting the listing criteria.
The only solution to this problem is to raise the stock price, which can only be done either by improving profits or by raising the expectation on the future profits.
It won't be long before the time comes when the criteria will be questioned in the first place, whether tradable market capitalization of 10 billion yen is sufficiently liquid investment.


The Time Is Not Far off when the Prime Market Listing Criteria Itself Will Be Questioned

<ul>
<li>I would like to discuss the issues on several interesting points in the report "Vision for Future Human Resources" compiled by the Ministry of Economy, Trade and Industry (METI).</li>
<li>Both company and employees have seen a gap between the skills they need and the reality, yet neither company nor employees have invested sufficiently. This has led to falling competitiveness.</li>
<li>Companies need to invest sufficiently in human resources to create added value from management that has been so busy cutting costs that it has saved to invest in human resources.</li>
</ul>


I would like to discuss the issues on several interesting points in the report "Vision for Future Human Resources" compiled by the Ministry of Economy, Trade and Industry (METI).
Both company and employees have seen a gap between the skills they need and the reality, yet neither company nor employees have invested sufficiently. This has led to falling competitiveness.
Companies need to invest sufficiently in human resources to create added value from management that has been so busy cutting costs that it has saved to invest in human resources.


The Key to Creating Added Value Is to Shift to Management that Values Human Resources

<ul>
<li>There is the problem that a wage gap exists between men and women even among regular employees, and that the percentage of non-regular workers is very high among women.</li>
<li>Issues to be addressed include the creation of a social infrastructure in which workers don’t have to leave jobs due to childbirth or child-rearing, and fair wages for non-regular workers.</li>
<li>Mandatory disclosure is an important step. Managers should also think of employees as partners in creating new value, rather than simply as labor, which will help to eliminate this issue.</li>
</ul>


There is the problem that a wage gap exists between men and women even among regular employees, and that the percentage of non-regular workers is very high among women.
Issues to be addressed include the creation of a social infrastructure in which workers don’t have to leave jobs due to childbirth or child-rearing, and fair wages for non-regular workers.
Mandatory disclosure is an important step. Managers should also think of employees as partners in creating new value, rather than simply as labor, which will help to eliminate this issue.


Mandatory Disclosure of Gender Wage Differentials Is Still a First Step

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)

Japan Among the Latest to Break Out; Buy Ideas in Growth/Cyclicals and Consumer Staples

Japan is the latest major country to break out, and we are buyers. Japan continues to be considerably further along in the bottoming process...

Vermilion Research

Interest Will Be Focused on when the TSE Will Begin Cleaning up the Prime Market

I would like to discuss the Nikkei article regarding "companies that fail to meet the trading volume criteria of the TSE Prime Market."

Metrical Inc

The Time Is Not Far off when the Prime Market Listing Criteria Itself Will Be Questioned

I would like to discuss the issues on the Nikkei article, "Transitional measures applied to 80% of companies failing to meet standards."

Metrical Inc

The Key to Creating Added Value Is to Shift to Management that Values Human Resources

The Nikkei published an article, "Japan, Where Annual Income of Department Managers Is Lower Than in Thailand: The Key to Economic Growth." I would...

Metrical Inc

Mandatory Disclosure of Gender Wage Differentials Is Still a First Step

I would like to discuss the issue on the Nikkei article "Change the Workplace by Disclosing the Gender Wage Difference."

Metrical Inc