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>More companies have made progress in the last 6 months as more companies have made only human capital policies. Specific measures will probably not become visible until April or later.</li>
<li>If companies are required to disclose their policies in a hasty manner, they may end up with a list of unrealistic measures in addition to policies that have no substance.</li>
<li>Companies are expected to spend the next year disseminating their human capital policies internally and implementing specific human capital measures to strengthen their own competitiveness.</li>
</ul>


More companies have made progress in the last 6 months as more companies have made only human capital policies. Specific measures will probably not become visible until April or later.
If companies are required to disclose their policies in a hasty manner, they may end up with a list of unrealistic measures in addition to policies that have no substance.
Companies are expected to spend the next year disseminating their human capital policies internally and implementing specific human capital measures to strengthen their own competitiveness.


Human Capital Measures Should Not Be a Case Of "Plowing the Field and Forgetting the Seeds”

<ul>
<li>There is concern that if the statements in Annual Securities Report, a legal document, are not questioned as misstatements, they will be left unwritten with no hope of being realized.</li>
<li>Most companies didn't have human capital policy as of last July. It’s welcome that more companies will take this opportunity to shift to a strategy of adding value through growth-investments.</li>
<li>Companies  are required to answer  the alignment of management and human resource strategies, whether they can reasonably demonstrate path to future growth in corporate value while investing in human capital.</li>
</ul>


There is concern that if the statements in Annual Securities Report, a legal document, are not questioned as misstatements, they will be left unwritten with no hope of being realized.
Most companies didn't have human capital policy as of last July. It’s welcome that more companies will take this opportunity to shift to a strategy of adding value through growth-investments.
Companies  are required to answer  the alignment of management and human resource strategies, whether they can reasonably demonstrate path to future growth in corporate value while investing in human capital.


Companies that Adequately Disclose Human Capital Must Be Performing Well on Human Capital Investment

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>In February, names which appeared in our "B" list such as <a href="https://www.smartkarma.com/entities/amvis-holdings-inc" target="_blank" data-smartkarma-citation="entities:31511:1" rel="noopener">Amvis Holdings Inc (7071 JP)</a> and <a href="https://www.smartkarma.com/entities/axxzia-inc" target="_blank" data-smartkarma-citation="entities:31482:1" rel="noopener">AXXZIA Inc (4936 JP)</a> announced they would be moving to the Prime Market.</li>
<li>In this insight, we take a look at updated lists, the price performance history of those baskets, and other interesting trades in the TOPIX index space.</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.
In February, names which appeared in our "B" list such as Amvis Holdings Inc (7071 JP) and AXXZIA Inc (4936 JP) announced they would be moving to the Prime Market.
In this insight, we take a look at updated lists, the price performance history of those baskets, and other interesting trades in the TOPIX index space.


TOPIX Inclusions: Who Is Ready (Mar 2023)

<ul>
<li>The demand for high-dividend stocks is due to the fact that financial assets are skewed toward the elderly and that the elderly have high demand for high-dividend stocks.</li>
<li>The under-40s generation, which seeks growth rather than dividends, focus on U.S. equities. Even if the tax deferral allowance is expanded, they are likely to pass through Japanese equities.</li>
<li>For asset building, investing in markets with higher returns is good idea. However, considering the market as source of risk money, Japanese equities and Tokyo market aren't in good condition.</li>
</ul>


The demand for high-dividend stocks is due to the fact that financial assets are skewed toward the elderly and that the elderly have high demand for high-dividend stocks.
The under-40s generation, which seeks growth rather than dividends, focus on U.S. equities. Even if the tax deferral allowance is expanded, they are likely to pass through Japanese equities.
For asset building, investing in markets with higher returns is good idea. However, considering the market as source of risk money, Japanese equities and Tokyo market aren't in good condition.


Need to Think About How to Make the Market a Place Where Young and Mature Generations Want to Invest

<ul>
<li>TSE, as market operator, should focus on stimulating the market, not informally meddling in the management of listed companies on matters that are not explicitly stated in the listing criteria.</li>
<li>Much of the reason ROE has not increased is that OP Margin has not increased. Despite gradual unwinding of cross-shareholdings, Total Asset Turnover slide and Financial Leverage remained unchanged.</li>
<li>Increasing OP Margin is prerequisite for ROE to rise. It confirms that the root of the problem is the challenge of using cash for growth investments to create competitive products.</li>
</ul>


TSE, as market operator, should focus on stimulating the market, not informally meddling in the management of listed companies on matters that are not explicitly stated in the listing criteria.
Much of the reason ROE has not increased is that OP Margin has not increased. Despite gradual unwinding of cross-shareholdings, Total Asset Turnover slide and Financial Leverage remained unchanged.
Increasing OP Margin is prerequisite for ROE to rise. It confirms that the root of the problem is the challenge of using cash for growth investments to create competitive products.


What Should a Japanese Company Do to Raise Profit Margin, a Prerequisite for Higher ROE?

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)

Human Capital Measures Should Not Be a Case Of "Plowing the Field and Forgetting the Seeds”

I would like to discuss the issues on the Nikkei article, "80% of companies lack measures in human capital management: survey by Sumitomo Mitsui...

Metrical Inc

Companies that Adequately Disclose Human Capital Must Be Performing Well on Human Capital Investment

I would like to discuss the issues of the Nikkei article on February 12, "Looming Mandatory Reporting: Is Your Company's Human Capital Disclosure...

Metrical Inc

TOPIX Inclusions: Who Is Ready (Mar 2023)

The recent price decline of pre-event candidate CELSYS could be seen as a new buying opportunity. Amvis and Axxzia will have their TOPIX Inclusion...

Janaghan Jeyakumar, CFA

Need to Think About How to Make the Market a Place Where Young and Mature Generations Want to Invest

I would like to discuss the February 6 Nikkei article, " Inflation calls for yield stock fever; Overseas investors watch for 'awakening' of...

Metrical Inc

What Should a Japanese Company Do to Raise Profit Margin, a Prerequisite for Higher ROE?

I would like to discuss the February 6 Nikkei article, "TSE should strongly urge management reform of listed companies."

Metrical Inc