Pan-Asia Index Flows & Special Situations, Quiddity Advisors

Janaghan Jeyakumar, CFA

Pan-Asia Index Flows & Special Situations

Quiddity Advisors

Pan-Asia Catalysts/Events

Event-Driven

<ul>
<li>Quiddity's "Who is Ready" series of insights aims to objectively identify names listed on the Tokyo Stock Exchange that are potential additions to the TOPIX Index in future.</li>
<li>Since my last insight, three new TOPIX Inclusion events have been confirmed: <a href="https://www.smartkarma.com/entities/m-a-research-institute-inc" target="_blank" data-smartkarma-citation="entities:36749:1" rel="noopener">M&amp;A Research Institute (9552 JP)</a>, <a href="https://www.smartkarma.com/entities/fp-partner-inc" target="_blank" data-smartkarma-citation="entities:40040:1" rel="noopener">FP Partner (7388 JP)</a>, and <a href="https://www.smartkarma.com/entities/i-ne-co-ltd" target="_blank" data-smartkarma-citation="entities:40117:1" rel="noopener">I-NE (4933 JP)</a> </li>
<li>Separately, <a href="https://www.smartkarma.com/entities/core-concept-technologies-inc" target="_blank" data-smartkarma-citation="entities:34323:1" rel="noopener">Core Concept Technologies Inc (4371 JP)</a> has announced it intends to work towards a Prime Market move in the future.</li>
</ul>


Quiddity's "Who is Ready" series of insights aims to objectively identify names listed on the Tokyo Stock Exchange that are potential additions to the TOPIX Index in future.
Since my last insight, three new TOPIX Inclusion events have been confirmed: M&amp;A Research Institute (9552 JP), FP Partner (7388 JP), and I-NE (4933 JP) 
Separately, Core Concept Technologies Inc (4371 JP) has announced it intends to work towards a Prime Market move in the future.


TOPIX Inclusions: Who Is Ready (Sep 2023)

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 need to obtain investment capital for future business development or the presence of stakeholders with a strong desire to improve asset efficiency may be the catalyst for selling property.</li>
<li>Of course, cash should be used to return to shareholders, but the stock market expects more profit growth, so higher profit margins and ROE are required.</li>
<li>The data from Ministry of Finance indicates that cash still hasn't been spent on investments. Cash appears to be currently being used reluctantly for investments that will generate future profits.</li>
</ul>


The need to obtain investment capital for future business development or the presence of stakeholders with a strong desire to improve asset efficiency may be the catalyst for selling property.
Of course, cash should be used to return to shareholders, but the stock market expects more profit growth, so higher profit margins and ROE are required.
The data from Ministry of Finance indicates that cash still hasn't been spent on investments. Cash appears to be currently being used reluctantly for investments that will generate future profits.


After Selling the Property, There Appears to Be No Set Plan for How the Cash Will Be Used

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

<ul>
<li>We remain bullish global equities if the major $93 support level on MSCI ACWI (ACWI-US) continues to hold (1+ year base support and the 10.5-month uptrend)</li>
<li>The 10-year Treasury yield remains below 4.35% resistance (a positive), but the DXY is climbing above $103.70-$104.70 resistance, and $105.70 is the last line of defense (9-month resistance).</li>
<li>Japan and India remain top overweights, with many of today's buy recommendations from these countries (Real Estate, Energy, Tech/Services, Discretionary). Also downgrading Taiwan and Greece to market weight.</li>
</ul>


We remain bullish global equities if the major $93 support level on MSCI ACWI (ACWI-US) continues to hold (1+ year base support and the 10.5-month uptrend)
The 10-year Treasury yield remains below 4.35% resistance (a positive), but the DXY is climbing above $103.70-$104.70 resistance, and $105.70 is the last line of defense (9-month resistance).
Japan and India remain top overweights, with many of today's buy recommendations from these countries (Real Estate, Energy, Tech/Services, Discretionary). Also downgrading Taiwan and Greece to market weight.


Remain Overweight Japan and India; Key Supports Holding; Buys in Energy, Tech/Services (India)

<ul>
<li>A survey result supports that the fact that women temporarily leave the workplace due to childbirth or childcare is detrimental to their careers.</li>
<li>Since there're issues that require solutions not only for companies but for society, judicial decisions will encourage companies to make female employees subject to the same conditions as male employees.</li>
<li>While more companies may take this ruling as an opportunity to consider conventional HR practices, since cases of employees going to court are rare, some companies may not act immediately.</li>
</ul>


A survey result supports that the fact that women temporarily leave the workplace due to childbirth or childcare is detrimental to their careers.
Since there're issues that require solutions not only for companies but for society, judicial decisions will encourage companies to make female employees subject to the same conditions as male employees.
While more companies may take this ruling as an opportunity to consider conventional HR practices, since cases of employees going to court are rare, some companies may not act immediately.


Judicial Decisions Are Also Important to Clarify the Nature of the Diversity Issues

<ul>
<li>While it's commendable that increasing numbers of companies are publishing skill matrices, there is not enough verification that the skill items are useful in expanding the value of the company.</li>
<li>It is a prerequisite that the process of selecting skill items and the nominating committee that governs it are functioning and independent.</li>
<li>Even if a governance framework and tools such as the skills matrix are introduced, whether they actually function depends largely on the quality of management.</li>
</ul>


While it's commendable that increasing numbers of companies are publishing skill matrices, there is not enough verification that the skill items are useful in expanding the value of the company.
It is a prerequisite that the process of selecting skill items and the nominating committee that governs it are functioning and independent.
Even if a governance framework and tools such as the skills matrix are introduced, whether they actually function depends largely on the quality of management.


Since It Is Unclear Whether Director Nomination Process Is Working, Voting Becomes More Important

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)

TOPIX Inclusions: Who Is Ready (Sep 2023)

The Offer Price for I-NE (4933 JP)'s secondary sale of shares was decided today. Our estimates show the Offer Quantity could exceed the demand from...

Janaghan Jeyakumar, CFA

After Selling the Property, There Appears to Be No Set Plan for How the Cash Will Be Used

I would like to discuss the issues on the Nikkei Shimbun on August 16, ""Will 23 Trillion Yen of Unrealized Real Estate Profits Move? Expectations...

Metrical Inc

Remain Overweight Japan and India; Key Supports Holding; Buys in Energy, Tech/Services (India)

We remain bullish on global equities as long as major $93 support on $ACWI continues to hold (1+ year base support and the 10.5-month uptrend)....

Vermilion Research

Judicial Decisions Are Also Important to Clarify the Nature of the Diversity Issues

I would like to discuss the issues on the August 14 Nikkei article, "What Lessons Should Companies Learn from the Two Rulings Focusing on Women's...

Metrical Inc

Since It Is Unclear Whether Director Nomination Process Is Working, Voting Becomes More Important

I would like to discuss the issues on the July 30 Nikkei article titled "The Expansion of 'Skill Matrix' Disclosure: Utilization in Dialogue with...

Metrical Inc