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>TSE plans to publish a list of companies that disclosed and those that are "under consideration" for disclosure in "Management Conscious of Cost of Capital and Stock Price." </li>
<li>TSE's plan to introduce actual investor feedback on how investors view dialogue and engagement and what kind of information disclosure and IR they expect from companies is commendable.</li>
<li>It is very important to know what investors actually want to know, what management is doing to achieve this, and how they should interact with investors in IR activities.</li>
</ul>


TSE plans to publish a list of companies that disclosed and those that are "under consideration" for disclosure in "Management Conscious of Cost of Capital and Stock Price." 
TSE's plan to introduce actual investor feedback on how investors view dialogue and engagement and what kind of information disclosure and IR they expect from companies is commendable.
It is very important to know what investors actually want to know, what management is doing to achieve this, and how they should interact with investors in IR activities.


Preparation in Advance for In-Depth Discussions Is Important for Both Investors and Managers

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>Wednesday will be a busy day as positions are put on and unwound following announcement of the changes to the MSC indices.</li>
<li>Friday will end the review cutoff for the ASX indices and Hang Seng Indexes will announce the December changes for the <a href="https://www.smartkarma.com/entities/hong-kong-hang-seng-index" target="_blank" data-smartkarma-citation="entities:22899:1" rel="noopener">HSI</a>, <a href="https://www.smartkarma.com/entities/hang-seng-china-enterprises-index" target="_blank" data-smartkarma-citation="entities:22900:1" rel="noopener">HSCEI</a>, <a href="https://www.smartkarma.com/entities/hang-seng-tech-index" target="_blank" data-smartkarma-citation="entities:31367:1" rel="noopener">HSTECH</a> and HSCI post market close.</li>
<li>Another week of large outflows for China focused ETFs with redemptions across all the major indices.</li>
</ul>


Wednesday will be a busy day as positions are put on and unwound following announcement of the changes to the MSC indices.
Friday will end the review cutoff for the ASX indices and Hang Seng Indexes will announce the December changes for the HSI, HSCEI, HSTECH and HSCI post market close.
Another week of large outflows for China focused ETFs with redemptions across all the major indices.


Index Rebalance & ETF Flow Recap: SSE50, Chinext/50, Renesas, Tencent, Amman Mineral

<ul>
<li>The baseless confidence of the 177 companies that finally moved to Standard Market that their market capitalization would increase in18 months was nothing more than a waste of time.</li>
<li>It is fine for a company to aim to be listed on the highest prime market, but high shareholder returns and quality management must come first.</li>
<li>If the listing criteria for prime market was JPY100 billion market capitalization, the gap with investors who initially expected prime market before the market restructuring would have been much smaller.</li>
</ul>


The baseless confidence of the 177 companies that finally moved to Standard Market that their market capitalization would increase in18 months was nothing more than a waste of time.
It is fine for a company to aim to be listed on the highest prime market, but high shareholder returns and quality management must come first.
If the listing criteria for prime market was JPY100 billion market capitalization, the gap with investors who initially expected prime market before the market restructuring would have been much smaller.


Prime Market Is Still the Market with the Most Listed Companies Even After 171 Companies Are Removed

<ul>
<li>INCJ is selling the last of its stake in <a href="https://www.smartkarma.com/entities/renesas-electronics-corp" target="_blank" data-smartkarma-citation="entities:15933:1" rel="noopener">Renesas Electronics (6723 JP)</a>. This will remove the overhang but could lead to selling in the short-term.</li>
<li>
<a href="https://www.smartkarma.com/entities/renesas-electronics-corp" target="_blank" data-smartkarma-citation="entities:15933:1" rel="noopener">Renesas Electronics (6723 JP)</a> has outperformed its peers over the last couple of years but valuations are in-line with the peer group (or slightly cheaper).</li>
<li>The float increase in global indices will coincide with the offering, but 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">TSE Tokyo Price Index TOPIX (TPX INDEX)</a> float increase will take quite a while.-</li>
</ul>


INCJ is selling the last of its stake in Renesas Electronics (6723 JP). This will remove the overhang but could lead to selling in the short-term.

Renesas Electronics (6723 JP) has outperformed its peers over the last couple of years but valuations are in-line with the peer group (or slightly cheaper).
The float increase in global indices will coincide with the offering, but the TSE Tokyo Price Index TOPIX (TPX INDEX) float increase will take quite a while.-


Renesas Electronics (6723 JP): INCJ Clean Up; Index Buying Smaller than Expected

<ul>
<li>Companies disclosing in English increased to 97.2% in 2023 prime market. However, only 15% of overseas investors responded "satisfied," indicating a continuing mismatch between disclosure content and investor needs.</li>
<li>TSE will prioritize the documents according to whether disclosure requires immediacy, and divide companies into mandatory companies and effort companies according to the size and foreign ownership of a company.</li>
<li>However, disclosure in English of lower priority documents would be more difficult. Separating companies would allow the prime market to include companies that don’t need to interact with global investors.</li>
</ul>


Companies disclosing in English increased to 97.2% in 2023 prime market. However, only 15% of overseas investors responded "satisfied," indicating a continuing mismatch between disclosure content and investor needs.
TSE will prioritize the documents according to whether disclosure requires immediacy, and divide companies into mandatory companies and effort companies according to the size and foreign ownership of a company.
However, disclosure in English of lower priority documents would be more difficult. Separating companies would allow the prime market to include companies that don’t need to interact with global investors.


The Problem Is that Companies that Don't Want to Do Disclosure in English Are Listed on Prime Market

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)

Preparation in Advance for In-Depth Discussions Is Important for Both Investors and Managers

I would like to discuss "Future Efforts Concerning "Measures to Achieve Management Conscious of Cost of Capital and Stock Price" and "Promotion and...

Metrical Inc

Index Rebalance & ETF Flow Recap: SSE50, Chinext/50, Renesas, Tencent, Amman Mineral

This recap highlights Insights covering Asian index rebalances (announcements/ forecasts/ IPO Fast Entry/ M&A driven changes). We also highlight...

Brian Freitas

Prime Market Is Still the Market with the Most Listed Companies Even After 171 Companies Are Removed

I would like to discuss "Standard Market Re-selection of Prime Market Listed Companies" from the 12th Follow-up Meeting on the Revision of Market...

Metrical Inc

Renesas Electronics (6723 JP): INCJ Clean Up; Index Buying Smaller than Expected

INCJ is exiting Renesas by selling the last of its holding. This will remove an overhang but limited passive buying and increased shares in...

Brian Freitas

The Problem Is that Companies that Don't Want to Do Disclosure in English Are Listed on Prime Market

I would like to discuss the disclosure in English of Prime Market companies in the material of the 12th Follow-up Meeting on the Revision of Market...

Metrical Inc