Pan-Asia Index Rebalances/ Events/ Delta One, Periscope Analytics

Brian Freitas

Pan-Asia Index Rebalances/ Events/ Delta One

Periscope Analytics

Periscope Analytics focuses on event-driven trades across Asia Pacific and provides comprehensive, timely and systematic coverage of index changes to major Asia Pacific indices in a structured manner.

The analysis includes forecasted inclusions and exclusions to all major Asian indices that have significant amount of tracking assets, including estimates of passive buy/sell flow on the stocks. The service also provides commentary and impact of market consultations, ground rule changes, and other events (IPOs, spin-offs, M&A) that could lead to index changes and passive flow.

Periscope Analytics works with multi-strategy hedge funds, proprietary trading firms, stat arb trading groups and long-only investors that invest and trade in the Asia Pacific region with the data being used to trade index rebalances, avoid pre-positioning and passive flow, and to time entry into and exit from stocks.

Event-Driven Trades Across Asia Pacific

Event-Driven

<ul>
<li>
<a href="https://www.smartkarma.com/entities/mercari-inc" target="_blank" data-smartkarma-citation="entities:27149:1" rel="noopener">Mercari Inc (4385 JP)</a> will be added to the <a href="https://www.smartkarma.com/entities/tokyo-stock-exchange-tokyo-price-index-topix" target="_blank" data-smartkarma-citation="entities:22910:1" rel="noopener">Tokyo Stock Exchange Tokyo Price Index Topix (TPX INDEX)</a> at the close on 28 July.</li>
<li>There are a lot of FFW changes, mainly reductions. This leads to large funding inflows on the large index stocks.</li>
<li>We estimate the inclusion of Mercari and the FFW changes will lead to a one-way turnover of 0.56% leading to a one-way trade of JPY 442.23bn (US$3.25bn).</li>
</ul>



Mercari Inc (4385 JP) will be added to the Tokyo Stock Exchange Tokyo Price Index Topix (TPX INDEX) at the close on 28 July.
There are a lot of FFW changes, mainly reductions. This leads to large funding inflows on the large index stocks.
We estimate the inclusion of Mercari and the FFW changes will lead to a one-way turnover of 0.56% leading to a one-way trade of JPY 442.23bn (US$3.25bn).


TOPIX July Rebalance: Mercari Inclusion, FFW Changes, US$6.5bn To Trade

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>I will discuss the Nikkei article, "The Ukraine crisis has triggered a conflict of interest between companies and the government, whose ESG values have become increasingly prevalent in business management."</li>
<li>As far as this issue is concerned, a company's management strategy is not made from the perspective of ESG, an area where some special values exist.</li>
<li>Management implements business strategies to maximize the company's corporate value, sustainable growth, and shareholder returns over the long term. Needless to say, this objective includes ESG.</li>
</ul>


I will discuss the Nikkei article, "The Ukraine crisis has triggered a conflict of interest between companies and the government, whose ESG values have become increasingly prevalent in business management."
As far as this issue is concerned, a company's management strategy is not made from the perspective of ESG, an area where some special values exist.
Management implements business strategies to maximize the company's corporate value, sustainable growth, and shareholder returns over the long term. Needless to say, this objective includes ESG.


Profit or ESG Should Not Be Prioritized, but ESG Should Be Aligned with Business Strategy

<ul>
<li>I would like to discuss the issues on the Nikkei article titled "Over 10 Companies Hold 'Continuation Meetings' of Shareholders' Meetings Due to Improper Accounting, etc."</li>
<li>Companies that hold "continuation meetings" are divided into 2 groups: inappropriate accounting and China lockdown. However, the companies in both groups plan to hold AGMs on days AGMs are concentrated.</li>
<li>It is too much to ask shareholders for voting without financial results, and many companies seem intent on avoiding dialogue with shareholders by holding AGM on such a concentration day.</li>
</ul>


I would like to discuss the issues on the Nikkei article titled "Over 10 Companies Hold 'Continuation Meetings' of Shareholders' Meetings Due to Improper Accounting, etc."
Companies that hold "continuation meetings" are divided into 2 groups: inappropriate accounting and China lockdown. However, the companies in both groups plan to hold AGMs on days AGMs are concentrated.
It is too much to ask shareholders for voting without financial results, and many companies seem intent on avoiding dialogue with shareholders by holding AGM on such a concentration day.


Companies Holding "Continuation Meetings" Will Hold Them on the Days of Concentration of the AGMs

<ul>
<li>I would like to discuss the points on the Nikkei article, "Mercari's Prime Market Approval Raises Hopes for Growth Market to Include Similar Companies in the Future."</li>
<li>Mercari's listing on prime market is a great hope for companies planning to list on prime market, and the inclusion in the TOPIX is also positive for their stock price.</li>
<li>"Transitional measures" companies need to carefully discuss the feasibility of the plan for meeting the listing criteria and whether they should continue to be listed as before.</li>
</ul>


I would like to discuss the points on the Nikkei article, "Mercari's Prime Market Approval Raises Hopes for Growth Market to Include Similar Companies in the Future."
Mercari's listing on prime market is a great hope for companies planning to list on prime market, and the inclusion in the TOPIX is also positive for their stock price.
"Transitional measures" companies need to carefully discuss the feasibility of the plan for meeting the listing criteria and whether they should continue to be listed as before.


The Light and Dark Sides of the Creation of the TSE Prime Market Make Us Think Again

<ul>
<li>I would like to discuss the Nikkei article on "Stock market interest is shifting to undervalued stocks, but analyst coverage of small- and mid-cap stocks is scarce."</li>
<li>Assuming investors don't buy a stock because it's cheap, but because they understand the gap between its intrinsic value and the share price, to make many investors understand the value.</li>
<li>Companies are required to execute capital allocations and communicate with analysts and investors to increase corporate value, and those that were able to do so were able to raise valuations.</li>
</ul>


I would like to discuss the Nikkei article on "Stock market interest is shifting to undervalued stocks, but analyst coverage of small- and mid-cap stocks is scarce."
Assuming investors don't buy a stock because it's cheap, but because they understand the gap between its intrinsic value and the share price, to make many investors understand the value.
Companies are required to execute capital allocations and communicate with analysts and investors to increase corporate value, and those that were able to do so were able to raise valuations.


Are Japanese Stocks Undervalued or Is There a Reason for Stagnant Valuations?

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)

TOPIX July Rebalance: Mercari Inclusion, FFW Changes, US$6.5bn To Trade

Mercari will be added to the TPX at the close on 28 July. There are a lot of FFW changes that will result in one-way turnover of 0.56% leading to a...

Brian Freitas

Profit or ESG Should Not Be Prioritized, but ESG Should Be Aligned with Business Strategy

I will discuss issues on the article, "The Ukraine crisis has triggered conflict of interest between companies and the government, whose ESG values...

Metrical Inc

Companies Holding "Continuation Meetings" Will Hold Them on the Days of Concentration of the AGMs

I would like to discuss on the Nikkei article titled "Over 10 Companies Hold Continuation Meetings." The date of AGMs should be considered as a...

Metrical Inc

The Light and Dark Sides of the Creation of the TSE Prime Market Make Us Think Again

I would like to discuss the points on the Nikkei article, "Mercari's Prime Market Approval Raises Hopes for Growth Market to Include Similar...

Metrical Inc

Are Japanese Stocks Undervalued or Is There a Reason for Stagnant Valuations?

I would like to discuss the Nikkei article on "Stock market interest is shifting to undervalued stocks, but analyst coverage of small- and mid-cap...

Metrical Inc