Month: October 2024

METRICAL: CG Stock Performance (Japan): September 2024

2024-10-01 posted by
September stock market was seen as a back-and-forth market, but a sell-off prevailed on the last trading day of the month, as investors were cautious about sooner-than-expected interest rates hike due to the launch of the new Ishiba administration.
In September, the CG Top 20 stock market outperformed both TOPIX and JPX400 for the fifth consecutive month.

The Japanese stock market, which had fallen until the middle of the month on fears of an early BOJ rate hike, recovered from the optimistic mood toward the end of the month, buoyed by the U.S. stock stocks rally and weaker yen, triggered by a large rate cut by the U.S. Fed. Later, the Japanese stocks fell back as sell-offs were triggered by the new Ishiba administration and the yen’s appreciation on the back of fears of an early rise in interest rates.

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METRICAL:Engagement Keeps Widening the Profitability Gap Between the Top and Bottom Companies in Market Cap

2024-10-01 posted by

I have discussed several times in my previous articles the widening gap between companies with large and small market capitalizations in terms of profitability and corporate governance initiatives. In this article, I would like to examine this issue. In my previous articles, “Increasing Profitability to Gain Support from Overseas Investors Is a Condition for Higher Valuation” and “Why Are Companies with High Corporate Governance Practices Ratings More Profitable?”, I stated that companies with high foreign ownership tend to have larger market capitalization and higher profitability. In addition, these companies also tend to have superior corporate governance practices. This is due to the fact that the companies have improved their profitability and corporate governance practices through years of engagement with overseas investors. Overseas investors have been calling for the need to improve the board of directors and the effective use of cash flow and cash on hand, including cash allocation, in order to increase corporate value. Based on our analysis to date, it appears that management is aware of the 30% foreign shareholding level as a threshold. Once this level is reached, there is a marked tendency to be forced to incorporate the opinions of overseas investors. It is expected that the engagement of overseas investors as a driver will further enhance the profitability and corporate governance of their portfolio companies (which tend to have large market capitalization). Thus, it can be inferred that the gap between companies with large market capitalization and those without will widen more and more.

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