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

In last week's Int'l Compass (Sept. 2), we highlighted emerging markets (EEM-US, Shanghai Comp) and Japan (TOPIX, TOPIX Small) as areas of bullish interest, with short-term bullish inflections suggesting the tide was turning in favor of these markets. This remains the focus in today's report, and especially on Japan; bullish price inflections and breakouts have started to proliferate, which suggests this could be the start of a broad-based rally for Japan in the weeks and months ahead.

In last week's Int'l Compass (Sept. 2), we highlighted emerging markets (EEM-US, Shanghai Comp) and Japan (TOPIX, TOPIX Small) as areas of bullish interest, with short-term bullish inflections suggesting the tide was turning in favor of these markets. This remains the focus in today's report, and especially on Japan; bullish price inflections and breakouts have started to proliferate, which suggests this could be the start of a broad-based rally for Japan in the weeks and months ahead.

Buy Japan On This Breakout ; TOPIX Breaking Out To 21-Year Highs; Actionable Theme: Growth Sectors

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 my previous articles, "Disclosure of Corporate Governance Report in English" and "Information Disclosure in English," I discussed information disclosure in English on this website. In this article, I would like to take a fresh look at information disclosure in English by Japanese companies, based on the "<a href="https://www.jpx.co.jp/english/corporate/news/news-releases/0060/b5b4pj000004aa15-att/b5b4pj000004aa2x.pdf" target="_blank" rel="noopener">Results of the Survey of Overseas Investors on English Disclosure by Japanese Companies</a>" released by TSE on August 30.

In my previous articles, "Disclosure of Corporate Governance Report in English" and "Information Disclosure in English," I discussed information disclosure in English on this website. In this article, I would like to take a fresh look at information disclosure in English by Japanese companies, based on the "Results of the Survey of Overseas Investors on English Disclosure by Japanese Companies" released by TSE on August 30.

Japan's Governance: TSE Survey "Information Disclosure in English”

On September 3, 2021, I attended the CFA Society Japan Seminar on "Tokyo Stock Exchange's New Market Classification." The 90-minute webinar from a representative of the Tokyo Stock Exchange consisted of a 60-minute presentation at the beginning and a 30-minute Q&amp;A session. The presentation was a detailed explanation along with a compiled material of the TSE's published materials, but the QA session was meaningful as it allowed us to ask questions individually about content not included in the materials. I also asked some questions that I had been wondering about and got answers to some of them, but not all of them, so it was meaningful that my understanding of this matter was a little more advanced than before. I have summarized the answers to my questions and my impressions and would like to report them here.

On September 3, 2021, I attended the CFA Society Japan Seminar on "Tokyo Stock Exchange's New Market Classification." The 90-minute webinar from a representative of the Tokyo Stock Exchange consisted of a 60-minute presentation at the beginning and a 30-minute Q&amp;A session. The presentation was a detailed explanation along with a compiled material of the TSE's published materials, but the QA session was meaningful as it allowed us to ask questions individually about content not included in the materials. I also asked some questions that I had been wondering about and got answers to some of them, but not all of them, so it was meaningful that my understanding of this matter was a little more advanced than before. I have summarized the answers to my questions and my impressions and would like to report them here.

Japan's Governance: Update On "Transitional Measures" For TSE Market Reorganization

Each month, Metrical updates its universe company data to analyze trends for universe companies as a whole and for individual companies. In this context, an unusual trend emerged in the data at the end of August. This is the Retired Top Management Score, which evaluates the unique practice of Japanese companies of having CEOs and other representative directors remain with the company as ex-CEO advisors even after they step down as directors. The fewer the number of ex-CEO Advisors, the higher the score. Until July, this score showed a significant positive correlation with ROE (actual) and ROA (actual), but this time it showed a significant negative correlation with ROE (actual), ROA (actual) and Tobin's Q. From the standpoint of promoting corporate governance and eliminating the unique practice of staying in the company as an ex-CEO advisor, I think we should carefully analyze this score. Until July, this score showed a significant positive correlation with ROE (actual) and ROA (actual), but this time it showed a significant negative correlation with ROE (actual), ROA (actual) and Tobin's Q.  From the standpoint of promoting corporate governance and eliminating the unique practice of staying in the company as an ex-CEO advisor, I think we should carefully analyze this score.

Each month, Metrical updates its universe company data to analyze trends for universe companies as a whole and for individual companies. In this context, an unusual trend emerged in the data at the end of August. This is the Retired Top Management Score, which evaluates the unique practice of Japanese companies of having CEOs and other representative directors remain with the company as ex-CEO advisors even after they step down as directors. The fewer the number of ex-CEO Advisors, the higher the score. Until July, this score showed a significant positive correlation with ROE (actual) and ROA (actual), but this time it showed a significant negative correlation with ROE (actual), ROA (actual) and Tobin's Q. From the standpoint of promoting corporate governance and eliminating the unique practice of staying in the company as an ex-CEO advisor, I think we should carefully analyze this score. Until July, this score showed a significant positive correlation with ROE (actual) and ROA (actual), but this time it showed a significant negative correlation with ROE (actual), ROA (actual) and Tobin's Q.  From the standpoint of promoting corporate governance and eliminating the unique practice of staying in the company as an ex-CEO advisor, I think we should carefully analyze this score.

Japan's Governance: Disclosure on Ex-CEO Advisors

In this article, I would like to focus on the Chair of the Board of Directors. For investors outside of Japan, this may come as a surprise. Who do you think chairs the board of directors in most Japanese companies? As the pie chart below shows, in the overwhelming majority of companies, the President or Chairman of the Board chairs the Board of Directors.

In this article, I would like to focus on the Chair of the Board of Directors. For investors outside of Japan, this may come as a surprise. Who do you think chairs the board of directors in most Japanese companies? As the pie chart below shows, in the overwhelming majority of companies, the President or Chairman of the Board chairs the Board of Directors.

Japan's Governance: Who Chairs the Board?

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)

Buy Japan On This Breakout ; TOPIX Breaking Out To 21-Year Highs; Actionable Theme: Growth Sectors

Japan (TOPIX, TOPIX Small) was a big focus for us last week, and it remains the focus in today's report; this could be the start of a broad-based...

Vermilion Research

Japan's Governance: TSE Survey "Information Disclosure in English”

There is a gap between the English disclosure information demanded by overseas investors in the TSE's survey and the information that listed...

Metrical Inc

Japan's Governance: Update On "Transitional Measures" For TSE Market Reorganization

Update: I had a chance to ask a TSE official about the TSE market reorganization. The change in TOPIX standards due to this market reclassification...

Metrical Inc

Japan's Governance: Disclosure on Ex-CEO Advisors

In the score for the unique practice of Japanese companies of retaining ex-CEO advisors, August data showed a different trend. This may have...

Metrical Inc

Japan's Governance: Who Chairs the Board?

Who do you think chairs the board of directors in most Japanese companies? As the pie chart below shows, in the overwhelming majority of companies,...

Metrical Inc