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.

METRICAL has been collaborating with BDTI on a study of the relationship between corporate governance practices and value creation. We have analyzed the corporate governance practices and value-creating performance of approximately 1,800 listed companies with a market capitalization of more than approximately JPY10 billion from a variety of perspectives. By examining board practices (the corporate governance guidelines, practices, and structure of the board of directors) and specific actions (the actual actions of the company) separately, this analysis has identified 3 financial performance indicators (ROE, ROA, and Tobin's Q) for each of the board practices and actions. This is because, since the introduction of the Corporate Governance Code, there has been some improvement in the activities of the Board of Directors. However, assuming that one of the key goals of a company is value creation, it is very important to regularly analyze whether such improvements (specifically, which improvements) lead to value creation in order to improve the effectiveness of engagement and stewardship. After the season of AGM, I would like to update you on how independent outside directors have changed.

METRICAL has been collaborating with BDTI on a study of the relationship between corporate governance practices and value creation. We have analyzed the corporate governance practices and value-creating performance of approximately 1,800 listed companies with a market capitalization of more than approximately JPY10 billion from a variety of perspectives. By examining board practices (the corporate governance guidelines, practices, and structure of the board of directors) and specific actions (the actual actions of the company) separately, this analysis has identified 3 financial performance indicators (ROE, ROA, and Tobin's Q) for each of the board practices and actions. This is because, since the introduction of the Corporate Governance Code, there has been some improvement in the activities of the Board of Directors. However, assuming that one of the key goals of a company is value creation, it is very important to regularly analyze whether such improvements (specifically, which improvements) lead to value creation in order to improve the effectiveness of engagement and stewardship. After the season of AGM, I would like to update you on how independent outside directors have changed.

Japan's Governance: Update on the ％ of Independent Outside Directors

Metrical scores and evaluates the corporate governance practices of approximately 1,700 companies listed on the Tokyo Stock Exchange. The scores (ratings) are based on more than 20 criteria. The 20 companies with the highest scores are indexed as CG Top 20 Stocks, for comparing to TOPIX and JPX400. The performance of CG Top 20 Stocks to that of TOPIX and JPX400, shows the outperformance of the Top 20 Stocks.

Metrical scores and evaluates the corporate governance practices of approximately 1,700 companies listed on the Tokyo Stock Exchange. The scores (ratings) are based on more than 20 criteria. The 20 companies with the highest scores are indexed as CG Top 20 Stocks, for comparing to TOPIX and JPX400. The performance of CG Top 20 Stocks to that of TOPIX and JPX400, shows the outperformance of the Top 20 Stocks.

Following the capital raising by two airlines at the end of last year, several food services companies have announced capital raising measures for companies whose businesses have been severely affected by COVID and whose equity capital has been severely damaged. It is expected that such companies will continue to move capital increases in the future. The last time, there was a rush of equity financing after the economic downturn triggered by GFC. Some companies were able to raise earnings after issuing new shares, while others were not. Issuing new shares imposes a heavy burden on existing shareholders, and the required rate of return on equity is also higher when the issue is made at a low stock price. I will be watching with interest to see how the earnings and the stock price performance of the company that will be increasing its capital will be.

Following the capital raising by two airlines at the end of last year, several food services companies have announced capital raising measures for companies whose businesses have been severely affected by COVID and whose equity capital has been severely damaged. It is expected that such companies will continue to move capital increases in the future. The last time, there was a rush of equity financing after the economic downturn triggered by GFC. Some companies were able to raise earnings after issuing new shares, while others were not. Issuing new shares imposes a heavy burden on existing shareholders, and the required rate of return on equity is also higher when the issue is made at a low stock price. I will be watching with interest to see how the earnings and the stock price performance of the company that will be increasing its capital will be.

Japan's Governance: Raising Capital and Cost of Capital Awareness

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

GigaDevice Semiconductor  / Technical Analysis

Market dynamics remain largely positive which continues to support our constructive outlook, and we view recent weakness as a buying opportunity. Below we highlight notable recent developments and actionable stocks within the Technology, Financials, and Materials Sectors.

Market dynamics remain largely positive which continues to support our constructive outlook, and we view recent weakness as a buying opportunity. Below we highlight notable recent developments and actionable stocks within the Technology, Financials, and Materials Sectors.

China Technology Sector Improving -- Add Exposure

METRICAL has been focusing on the "major shareholder factor" for years. It is not uncommon for a parent company to list its subsidiaries and affiliates while maintaining a certain level of equity stake, including the unique parent-subsidiary listing in Japan. In the case of family companies, it is also possible for the founder's family to maintain a certain level of equity stake in the company, given how the company was formed. As I have shown in my previous article, if we look at the companies in which these large shareholders' equity interests are maintained in terms of the percentage of independent outside directors on the board of directors, it has been confirmed that these companies generally have a low % of independent outside directors. On the other hand, the profitability of these companies is relatively high compared to the average of all listed companies. In this article, we will look at the board practices of these companies.

METRICAL has been focusing on the "major shareholder factor" for years. It is not uncommon for a parent company to list its subsidiaries and affiliates while maintaining a certain level of equity stake, including the unique parent-subsidiary listing in Japan. In the case of family companies, it is also possible for the founder's family to maintain a certain level of equity stake in the company, given how the company was formed. As I have shown in my previous article, if we look at the companies in which these large shareholders' equity interests are maintained in terms of the percentage of independent outside directors on the board of directors, it has been confirmed that these companies generally have a low % of independent outside directors. On the other hand, the profitability of these companies is relatively high compared to the average of all listed companies. In this article, we will look at the board practices of these companies.

Japan's Governance: Major Shareholder Factor

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: Update on the ％ of Independent Outside Directors

As of June, the number of companies with a majority of independent directors increased 41 to 136 from a year ago out of 1,773 companies in Metrical...

Metrical Inc

Japan's Governance: Stock Performance

Metrical scores the corporate governance practices of approximately 1,700 companies listed on the TSE. The 20 companies with the highest scores...

Metrical Inc

Japan's Governance: Raising Capital and Cost of Capital Awareness

After the rush of equity financing after GFC, some companies could increase their earnings after issuing new shares, while others couldn’t. The...

Metrical Inc

China Technology Sector Improving -- Add Exposure

Market dynamics remain largely positive which continues to support our constructive outlook, and we view recent weakness as a buying opportunity....

Vermilion Research

Japan's Governance: Major Shareholder Factor

In Japan, it’s common for a parent company to list its subsidiaries and affiliates while maintaining a certain level of equity stake. In this...

Metrical Inc