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.

In recent years, more and more companies have begun to provide and disclose notices of general meetings of shareholders in English. In addition, an increasing number of companies are allowing electromagnetic voting, although this requires changes to the company's articles of incorporation. These are very good initiatives for shareholders and investors. On the other hand, the number of companies submitting their corporate governance reports to the Tokyo Stock Exchange in English is still limited. As of June 2021, only 306 of the 3,752 listed companies have submitted their corporate governance reports in English. The chart below shows the number of companies that have filed their corporate governance reports in English on a monthly basis since May 2018. You can see from the bar chart that the number has increased at a very moderate pace.

In recent years, more and more companies have begun to provide and disclose notices of general meetings of shareholders in English. In addition, an increasing number of companies are allowing electromagnetic voting, although this requires changes to the company's articles of incorporation. These are very good initiatives for shareholders and investors. On the other hand, the number of companies submitting their corporate governance reports to the Tokyo Stock Exchange in English is still limited. As of June 2021, only 306 of the 3,752 listed companies have submitted their corporate governance reports in English. The chart below shows the number of companies that have filed their corporate governance reports in English on a monthly basis since May 2018. You can see from the bar chart that the number has increased at a very moderate pace.

Japan's Governance: Disclosure of Corporate Governance Report in English

In my previous article, "Human Rights Policy," I discussed the fact that the management of TamaHome (1419) has acted and behaved in a manner that is inconsistent with respect for human rights and is not in line with the "Human Rights Policy" posted on the company's website. It is not uncommon for Japanese companies to put too much emphasis on formalities and not enough on actual actions. I often see allegations of copy and paste in the corporate governance reports that the Tokyo Stock Exchange requires listed companies to submit.

In my previous article, "Human Rights Policy," I discussed the fact that the management of TamaHome (1419) has acted and behaved in a manner that is inconsistent with respect for human rights and is not in line with the "Human Rights Policy" posted on the company's website. It is not uncommon for Japanese companies to put too much emphasis on formalities and not enough on actual actions. I often see allegations of copy and paste in the corporate governance reports that the Tokyo Stock Exchange requires listed companies to submit.

Japan's Governance: The Problem of Copy and Paste Allegations

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

Will Semiconductor   Shan / Technical Analysis

New developments suggest caution is warranted, and leads us to believe the mixed market environment is poised to continue. The new and concerning developments include widening high yield spreads in the U.S. and Europe and improving relative strength for defensive Sectors -- both are clear signs of risk aversion. At the same time, global indexes remain above critical support levels; until this changes our neutral outlook remains appropriate.

New developments suggest caution is warranted, and leads us to believe the mixed market environment is poised to continue. The new and concerning developments include widening high yield spreads in the U.S. and Europe and improving relative strength for defensive Sectors -- both are clear signs of risk aversion. At the same time, global indexes remain above critical support levels; until this changes our neutral outlook remains appropriate.

Global Equity Strategy: Reason For Caution; Actionable Themes: Services/Technology & Staples

The Tokyo Stock Exchange announced on April 30 that it will reform TOPIX in conjunction with the TSE's market reorganization. As I have mentioned several times in previous articles, TOPIX will be reformed to exclude stocks that do not meet the market capitalization criteria after October 2022, and to "select" stocks based on certain criteria, rather than including all stocks listed on the market as the current index does, in order to improve the quality of the index. One source says that the S&amp;P 500 will be included. According to one view, the new TOPIX will be modeled after the S&amp;P 500. It is more important to pay attention to this method of "selection" based on certain criteria.

The Tokyo Stock Exchange announced on April 30 that it will reform TOPIX in conjunction with the TSE's market reorganization. As I have mentioned several times in previous articles, TOPIX will be reformed to exclude stocks that do not meet the market capitalization criteria after October 2022, and to "select" stocks based on certain criteria, rather than including all stocks listed on the market as the current index does, in order to improve the quality of the index. One source says that the S&amp;P 500 will be included. According to one view, the new TOPIX will be modeled after the S&amp;P 500. It is more important to pay attention to this method of "selection" based on certain criteria.

As you may have heard, on July 9, 2021, Tokyo Stock Exchange, Inc. released the results of its primary assessment of compliance with the listing maintenance criteria for the new market category. Upon receipt of the results, a number of companies announced that they have confirmed that they are in compliance with the listing maintenance criteria for the Prime Market. It is reported that 664 companies, or about 30% of the 1,527 companies listed on the first section of the Tokyo Stock Exchange, failed to meet the newly established criteria of "market capitalization considering the floating stocks. These listed companies will be able to list on the prime market for the time being if they disclose a report that shows how they can improve their market capitalization, such as by increasing the market capitalization calculated by shares traded on the market. On the other hand, as I mentioned in my previous article, "TSE Reorganization and the Future of Corporate Governance," the TSE is aiming to revise its corporate governance code by December and has indicated that it will impose new governance guidelines on companies listed on the prime market.

As you may have heard, on July 9, 2021, Tokyo Stock Exchange, Inc. released the results of its primary assessment of compliance with the listing maintenance criteria for the new market category. Upon receipt of the results, a number of companies announced that they have confirmed that they are in compliance with the listing maintenance criteria for the Prime Market. It is reported that 664 companies, or about 30% of the 1,527 companies listed on the first section of the Tokyo Stock Exchange, failed to meet the newly established criteria of "market capitalization considering the floating stocks. These listed companies will be able to list on the prime market for the time being if they disclose a report that shows how they can improve their market capitalization, such as by increasing the market capitalization calculated by shares traded on the market. On the other hand, as I mentioned in my previous article, "TSE Reorganization and the Future of Corporate Governance," the TSE is aiming to revise its corporate governance code by December and has indicated that it will impose new governance guidelines on companies listed on the prime market.

Japan's Governance: TSE Prime Market Listing Requirements and Revised Corporate Governance Code

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's Governance: Disclosure of Corporate Governance Report in English

Only 8% of companies disclose the corporate governance reports in English. Foreign investors, who trade more than 70% of TSE, can enhance...

Metrical Inc

Japan's Governance: The Problem of Copy and Paste Allegations

It is not uncommon for Japanese companies to put too much emphasis on formalities and not enough on actual actions. I often see allegations of copy...

Metrical Inc

Global Equity Strategy: Reason For Caution; Actionable Themes: Services/Technology & Staples

With interest rates expected to move sideways to lower, we recommend a mix of growth and defensive Sectors. Today we focus on Services/Technology...

Vermilion Research

Japan's Governance: TOPIX Reform

New TOPIX will result in some companies failing to remain in TOPIX even if they can maintain listing on prime market. They will cut cross...

Metrical Inc

Japan's Governance: TSE Prime Market Listing Requirements and Revised Corporate Governance Code

While increasing the # of independent directors is a huge challenge in Japanese, there are still companies with such high % of independent...

Metrical Inc