Pan-Asia Catalysts/Events, Quiddity Advisors

Travis Lundy

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

TSE Tokyo Price Index TOPIX / Event-Driven

<ul>
<li>Every year it's the same trade. But it isn't really. But it kinda is. This year it is Wednesday and Thursday. There are risks to the analysis - notably allocation.</li>
<li>But, ceteris paribus, it is still possibly a ¥1,580,876,450,407 buying spree to take place on one day into the close later this month. Or something close to it.</li>
<li>And for a two-day period, over the last ten years, the average return is 1.60% on these two days with a 9:1 win ratio. Lots of angles here.</li>
</ul>


Every year it's the same trade. But it isn't really. But it kinda is. This year it is Wednesday and Thursday. There are risks to the analysis - notably allocation.
But, ceteris paribus, it is still possibly a ¥1,580,876,450,407 buying spree to take place on one day into the close later this month. Or something close to it.
And for a two-day period, over the last ten years, the average return is 1.60% on these two days with a 9:1 win ratio. Lots of angles here.


The BIG March 2023 "Wednesday Thursday Trade"

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>While investment managers spend money on expanding their ESG investment systems and disclosures in preparation for the FSA's guidelines, they expect the business of ESG funds to continue to grow.</li>
<li>It's desirable for investment managers to disclose qualitative and quantitative information, recognizing the need to incorporate ESG factors into their investment decisions and to show that results are being achieved.</li>
<li>Some investment managers are redefining ESG funds to incorporate ESG factors beyond ESG integration, and this trial-and-error process will continue as investment managers position ESG investment trusts as key products.</li>
</ul>


While investment managers spend money on expanding their ESG investment systems and disclosures in preparation for the FSA's guidelines, they expect the business of ESG funds to continue to grow.
It's desirable for investment managers to disclose qualitative and quantitative information, recognizing the need to incorporate ESG factors into their investment decisions and to show that results are being achieved.
Some investment managers are redefining ESG funds to incorporate ESG factors beyond ESG integration, and this trial-and-error process will continue as investment managers position ESG investment trusts as key products.


Trial and Error Continues for Investment Managers to Enhance Disclosure for Resuming ESG Fund Sales

<ul>
<li>Japanese companies are keen on obtaining ISO certifications, so it's relatively easy for companies that have obtained these certifications to ensure the comprehensiveness of sustainability information by disclosing such information.</li>
<li>It’s useful to know the degree to which management recognized the challenges and the leadership that management could exercise in solving those challenges, rather than laundry list of self-praise information.</li>
<li>For management to recognize issues and implement initiatives at global level, it’s expected to hire a head who is sensitive to global initiatives and work with him/her to resolve issues.</li>
</ul>


Japanese companies are keen on obtaining ISO certifications, so it's relatively easy for companies that have obtained these certifications to ensure the comprehensiveness of sustainability information by disclosing such information.
It’s useful to know the degree to which management recognized the challenges and the leadership that management could exercise in solving those challenges, rather than laundry list of self-praise information.
For management to recognize issues and implement initiatives at global level, it’s expected to hire a head who is sensitive to global initiatives and work with him/her to resolve issues.


Sustainability Reporting Is Expected to Share Valuable Information, Not PR Magazine Type Information

<ul>
<li>TSE will require companies with P/Bs below 1x to disclose improvement plans, urging them to shift to management that reflects an awareness of their cost of capital and stock price.</li>
<li>The good thing about this TSE request is that "cost of capital" will be widely recognized by companies. Companies can no longer easily reject shareholder proposals regarding cost of capital.</li>
<li>It should also be an opportunity for management to evaluate its own corporate value and compare it to market value and consider whether it should remain listed or go private.</li>
</ul>


TSE will require companies with P/Bs below 1x to disclose improvement plans, urging them to shift to management that reflects an awareness of their cost of capital and stock price.
The good thing about this TSE request is that "cost of capital" will be widely recognized by companies. Companies can no longer easily reject shareholder proposals regarding cost of capital.
It should also be an opportunity for management to evaluate its own corporate value and compare it to market value and consider whether it should remain listed or go private.


The Effect of the TSE Requesting an Improvement Plan from a Company with a P/B Below 1x Is....

<ul>
<li>Few companies have generally achieved significant growth since listing, and about half of the companies are below their market capitalization at the IPO, which is challenges in TSE Growth Market.</li>
<li>Even if the number of companies subject to such shares is limited, the use of multiple voting shares shouldn't be ruled out if the dilution of voting rights hinders fundraising.</li>
<li>The key to solving the challenges of TSE Growth Market, where few companies have growth potential and have financing needs, is the ability of management to realize growth potential post-listing.</li>
</ul>


Few companies have generally achieved significant growth since listing, and about half of the companies are below their market capitalization at the IPO, which is challenges in TSE Growth Market.
Even if the number of companies subject to such shares is limited, the use of multiple voting shares shouldn't be ruled out if the dilution of voting rights hinders fundraising.
The key to solving the challenges of TSE Growth Market, where few companies have growth potential and have financing needs, is the ability of management to realize growth potential post-listing.


What's Solution for TSE Growth Market, Where IPOs Became the Goal and Lost Growth Due to Burnout?

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)

The BIG March 2023 "Wednesday Thursday Trade"

This year, there is a US$12bn buy to do on 29 March at the close. Historically, performance is pretty good both on a 2-day period, then slumps....

Travis Lundy

Trial and Error Continues for Investment Managers to Enhance Disclosure for Resuming ESG Fund Sales

I would like to discuss the issues regarding the February 24 Nikkei article, "Asset Management Companies Urge 'ESG' Responses."

Metrical Inc

The Effect of the TSE Requesting an Improvement Plan from a Company with a P/B Below 1x Is....

I would like to discuss the summary of the materials disclosed by the TSE on February 15 for the 8th Follow-up Meeting on the Revision of Market...

Metrical Inc

What's Solution for TSE Growth Market, Where IPOs Became the Goal and Lost Growth Due to Burnout?

I would like to discuss "The use of multiple voting shares" proposed by METI at the "8th Follow-up Meeting on the Revision of Market Segmentation."

Metrical Inc

The BIG March 2023 "Wednesday Thursday Trade"

This year, there is a US$12bn buy to do on 29 March at the close. Historically, performance is pretty good both on a 2-day period, then slumps....

Travis Lundy

Trial and Error Continues for Investment Managers to Enhance Disclosure for Resuming ESG Fund Sales

I would like to discuss the issues regarding the February 24 Nikkei article, "Asset Management Companies Urge 'ESG' Responses."

Metrical Inc

Sustainability Reporting Is Expected to Share Valuable Information, Not PR Magazine Type Information

I would like to discuss the issues on the January 23 Nikkei article, "Sustainability Reporting in Japan, Quality Challenges: Only 4% Disclose...

Metrical Inc

The Effect of the TSE Requesting an Improvement Plan from a Company with a P/B Below 1x Is....

I would like to discuss the summary of the materials disclosed by the TSE on February 15 for the 8th Follow-up Meeting on the Revision of Market...

Metrical Inc

What's Solution for TSE Growth Market, Where IPOs Became the Goal and Lost Growth Due to Burnout?

I would like to discuss "The use of multiple voting shares" proposed by METI at the "8th Follow-up Meeting on the Revision of Market Segmentation."

Metrical Inc