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>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

<ul>
<li>While the number of companies with majority of independent directors is still small (15.7% of the Metrical Universe as of September 2023), the number of those companies is steadily increasing.</li>
<li>The group of companies with over 50% independent director are superior in market capitalization, ratio of foreign shareholders, ratio of female board members, ROE, ROA, Tobin's Q, and Metrical Score.</li>
<li>Given that the presence of overseas investors remains high, profitability, share price valuation, and corporate governance practices such as independent director ratios will continue to improve in the future.</li>
</ul>


While the number of companies with majority of independent directors is still small (15.7% of the Metrical Universe as of September 2023), the number of those companies is steadily increasing.
The group of companies with over 50% independent director are superior in market capitalization, ratio of foreign shareholders, ratio of female board members, ROE, ROA, Tobin's Q, and Metrical Score.
Given that the presence of overseas investors remains high, profitability, share price valuation, and corporate governance practices such as independent director ratios will continue to improve in the future.


Companies with over 50% Independent Directors Have High Profitability and Stock Valuations

<ul>
<li>Managers self-analyze the factors that lead to P/B of below 1x, as companies fail to appreciate their growth potential and to ensure profitability in excess of their cost of capital.</li>
<li>This seems to be dilemma in that companies' failure to realize sufficient profitability, along with insufficient growth investments, prevents them from sharing the image of corporate value growth with investors.</li>
<li>Managers believe that the first step is to improve ROE by reshuffling business portfolios and promoting profitability improvement, but reducing excess cash and increasing shareholder returns should be pursued simultaneously.</li>
</ul>


Managers self-analyze the factors that lead to P/B of below 1x, as companies fail to appreciate their growth potential and to ensure profitability in excess of their cost of capital.
This seems to be dilemma in that companies' failure to realize sufficient profitability, along with insufficient growth investments, prevents them from sharing the image of corporate value growth with investors.
Managers believe that the first step is to improve ROE by reshuffling business portfolios and promoting profitability improvement, but reducing excess cash and increasing shareholder returns should be pursued simultaneously.


Challenge Is to Simultaneously Reduce Cash on Hand and Achieve Profitability over Cost of Capital

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)

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

Companies with over 50% Independent Directors Have High Profitability and Stock Valuations

I would like to discuss the issues on the ratios of independent directors of the 1,787 companies in the Metrical Universe at the end of September...

Metrical Inc

Challenge Is to Simultaneously Reduce Cash on Hand and Achieve Profitability over Cost of Capital

I would like to discuss the issues on the September 27th Nikkei Shimbun article, "60% of Top Managers Target Double-Digit ROE, Growth Through Human...

Metrical Inc