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>Although it's important that the quality of companies be maintained and improved through metabolism, the number of listed companies has consistently increased due to the many IPOs and few delistings.</li>
<li>Many founders used IPOs as a tax-saving measure, and many managers were not thoughtful enough to increase shareholder profits, which is why there were many IPOs and few delistings.</li>
<li>Delisting through MBO or TOB for parent and subsidiary listed subsidiaries is much more effective than "TSE request" in reducing the number of companies with P/B below 1x.</li>
</ul>


Although it's important that the quality of companies be maintained and improved through metabolism, the number of listed companies has consistently increased due to the many IPOs and few delistings.
Many founders used IPOs as a tax-saving measure, and many managers were not thoughtful enough to increase shareholder profits, which is why there were many IPOs and few delistings.
Delisting through MBO or TOB for parent and subsidiary listed subsidiaries is much more effective than "TSE request" in reducing the number of companies with P/B below 1x.


Meaningful If "P/B Below 1x" Is a Change of Mindset that Makes Managers Decide to Take an MBO

<ul>
<li>While necessary talent should be sought from both outside and inside the company, it is not good for the company's future if the most of internal executive directors are male.</li>
<li>The appointment of women and foreign board members is an effective way to transform the board of directors to ensure transparency and objectivity, without compromising the traditional atmosphere of familiarity.</li>
<li>Companies with a higher percentage of female board members tend to be more proactive in their corporate governance practices and more diligent about improving profitability and stock valuation.</li>
</ul>


While necessary talent should be sought from both outside and inside the company, it is not good for the company's future if the most of internal executive directors are male.
The appointment of women and foreign board members is an effective way to transform the board of directors to ensure transparency and objectivity, without compromising the traditional atmosphere of familiarity.
Companies with a higher percentage of female board members tend to be more proactive in their corporate governance practices and more diligent about improving profitability and stock valuation.


% of Female Board Members Asks "Seriousness" Of Improving Profitability and Governance Etc.

<ul>
<li>The group of companies with lower than 25% female board member will only manage to meet the targets by "matching numbers," as few companies have high awareness regarding the practice.</li>
<li>Since the government target of 30% female managers was set in 2005, companies' awareness remains low. It's not easy to raise the ratio to 30% by the methods so far.</li>
<li>There are a number of initiatives that will not progress unless top management is replaced by women, including accelerated promotion of women to management positions and female board members.</li>
</ul>


The group of companies with lower than 25% female board member will only manage to meet the targets by "matching numbers," as few companies have high awareness regarding the practice.
Since the government target of 30% female managers was set in 2005, companies' awareness remains low. It's not easy to raise the ratio to 30% by the methods so far.
There are a number of initiatives that will not progress unless top management is replaced by women, including accelerated promotion of women to management positions and female board members.


Only 20% of Current CEOs in Japan Expected to Have a Female CEO Within 10 Years

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

TSE Tokyo Price Index TOPIX / Technical Analysis

<ul>
<li>The MSCI ACWI index (ACWI-US) continues to test major support at $90.50-$91.50, though no decisive break yet; as long as this support area holds, we remain constructive on global equities.</li>
<li>MSCI EM (EEM-US) continues to test $37 support, while MSCI ACWI ex-US (ACWX-US) and EAFE (EFA-US) are testing supports at $45 and $65-$66, respectively</li>
<li>Remain overweight and add exposure to Japan; the TOPIX remains in a 1.5-year RS uptrend (vs. MSCI ACWI), and continues to hold above 5-month support at 2200-2215</li>
</ul>


The MSCI ACWI index (ACWI-US) continues to test major support at $90.50-$91.50, though no decisive break yet; as long as this support area holds, we remain constructive on global equities.
MSCI EM (EEM-US) continues to test $37 support, while MSCI ACWI ex-US (ACWX-US) and EAFE (EFA-US) are testing supports at $45 and $65-$66, respectively
Remain overweight and add exposure to Japan; the TOPIX remains in a 1.5-year RS uptrend (vs. MSCI ACWI), and continues to hold above 5-month support at 2200-2215


Remain Overweight and Add Exposure to Japan; Buys in Insurance, Services, Tech, Staples, Utilities

<ul>
<li>The groups with over 30% female board members and 25%-30% have higher percentage of foreign shareholders, suggesting that overseas investor engagement drives raising the ratio and that awareness is high.</li>
<li>Groups with 0% female board members include small companies and are distant from overseas investor engagement, but are unlikely to improve practices substantially, given that they have no female executives.</li>
<li>The group with over 30% female board members had noticeably higher ROE and Tobin'sQ than those with 25%-30%, which suggests that the high ROE was highly valued by overseas investors.</li>
</ul>


The groups with over 30% female board members and 25%-30% have higher percentage of foreign shareholders, suggesting that overseas investor engagement drives raising the ratio and that awareness is high.
Groups with 0% female board members include small companies and are distant from overseas investor engagement, but are unlikely to improve practices substantially, given that they have no female executives.
The group with over 30% female board members had noticeably higher ROE and Tobin'sQ than those with 25%-30%, which suggests that the high ROE was highly valued by overseas investors.


% of Female Board Members Is a Measure of a Company's Seriousness About Improving Its Practices

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)

Meaningful If "P/B Below 1x" Is a Change of Mindset that Makes Managers Decide to Take an MBO

I would like to discuss the issues on the October 6 Nikkei Shimbun article, "More MBO Delistings Expected to Improve P/B below 1x."

Metrical Inc

% of Female Board Members Asks "Seriousness" Of Improving Profitability and Governance Etc.

I would like to discuss the issues on the October 2 Nikkei Newspaper's article, "Pipeline Reflects Seriousness of the "30% by 2030" Goal for the...

Metrical Inc

Only 20% of Current CEOs in Japan Expected to Have a Female CEO Within 10 Years

I would like to discuss the issues on the October 3 Nikkei Newspaper article, "More than 30% female board members; 80% of managers say it's...

Metrical Inc

Remain Overweight and Add Exposure to Japan; Buys in Insurance, Services, Tech, Staples, Utilities

Remain Overweight and Add Exposure to #Japan; $TOPIX continues to hold above 5-month support at 2200-2215. Next down supports being tested at 4000...

Vermilion Research

% of Female Board Members Is a Measure of a Company's Seriousness About Improving Its Practices

I would like to discuss the issues on the above based on the percentage of female board members of the 1,781 companies in the Metrical Universe at...

Metrical Inc