California, New York pension funds vote against Toyota chairman

TOKYO : Two of the largest U.S. public pension funds have voted against the re-election of Toyota Motor Corp Chairman Akio Toyoda, shareholder voting records showed, sharpening the focus on the automaker's annual meeting later this month.

The California Public Employees' Retirement System (CalPERS) and the Office of the New York City Comptroller also voted for a resolution urging Toyota to improve disclosure of its lobbying on climate change, according to postings by the funds.

Two leading proxy advisory firms last week raised issues about governance at the automaker. One, Glass Lewis, recommended shareholders vote against re-electing Toyoda, citing what it said was his responsibility for the lack of a sufficiently independent board.

The disclosures by the public pension funds, both of which have records for activism, underscore the pressure Toyota faces at its annual meeting on June 14 over board oversight and its strategy of pushing electric vehicle (EV) alternatives, including hybrids like the Prius.

Toyota said on Friday it actively engages in dialogue with shareholders and investors, and considers an optimal board structure while taking opinions and advice.

The world's largest automaker has been a target for climate activists and green investors in recent years who say it has been too slow to roll out battery-electric vehicles.

Japanese companies have faced increasing scrutiny from shareholders on governance. However, such shareholder proposals have struggled to gain traction, given that domestic investors are usually more willing to back boards and because of the cross-shareholdings by affiliated companies.

Toyota has previously said its board meets governance standards set by the Tokyo Stock Exchange for independent oversight and said it would act with "objectivity, independence and an ability to conduct appropriate supervision".

It said Toyoda, the grandson of the company's founder, had been re-nominated to the board because he would push Toyota's transformation from auto manufacturing to a company that also provides a range of "mobility" services.

Toyota's board has recommended shareholders vote against the climate lobbying disclosure proposal. It said Toyota was committed to carbon neutrality by 2050 but the company needed the flexibility to make quick adjustments, including in how it makes disclosures.

CalPERS, the largest U.S. public pension fund with some $450 billion in assets under management, said it voted against Toyoda and other non-independent directors due to board independence levels' being below 50 per cent.

CalPERS said it backed the lobbying resolution because "shareholders would benefit from improved disclosure of lobbying activities." The votes were consistent with its governance and sustainability principles, it said.

CalPERS said it had voted about 20 million shares on the Toyota resolutions, less than 0.2 per cent of the stock on issue, but it is an influential voice among global investors.

Toyota said it has been in talks with CalPERS and heard its opinion that outside directors should account for more than half of the company's board.

Toyota shares closed up 3.4 per cent, outperforming the 1.2 per cent gain in the Nikkei index.

The company's shares have returned 13 per cent including dividends this year, underperforming the broader index, which returned 21 per cent.

BOARD INDEPENDENCE

New York City Comptroller Brad Lander said in a statement the Toyota board was not adequately independent.

"A board that is genuinely independent of management and appropriately focused on maximizing long-term shareholder value, can strengthen and affirm Toyota's commitment to electric vehicles," he said.

The New York comptroller's office oversees a pension system with $243 billion in assets under management. Those funds held 6.7 million shares in Toyota Group companies, including Toyota Boshoku and Toyota Tsusho as of end March. It was not clear what share of that was Toyota Motor Corp.

The New York pension system has also urged both Ford and General Motors to move rapidly toward electrification and to disclose more about their lobbying on vehicle standards.

Toyota has said its approach to rolling out a range of alternatives to gasoline-engine cars - including hybrids, plug-in hybrids, hydrogen and electric vehicles - is better overall for reducing carbon emissions and more practical than switching to EVs alone.

In April, the automaker sold 8,584 EVs worldwide, including its Lexus brand, accounting for more than 1 per cent of its global sales in a single month for the first time. It seeks to sell 1.5 million EVs annually by 2026.

S&P 500, Nasdaq 100, Dow Forecasts: Rate Hike Rally Begins Pullback

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U.S. equities have put in a massive rally after the Fed hiked rates last week. And this was a ‘famine to feast’ kind of mood as the Nasdaq 100 had hit a fresh 10-month low just last Tuesday. Sellers even seemed aggressive around the initial statement of the FOMC hiking rates. But when the press conference started 30 minutes later, stocks began to bounce and that bounce hasn’t really quieted until last night. That rally accumulated as much as 13.56% in the Nasdaq 100 – in one week. And even then, it’s still early: There’s a large zone of support sitting underneath both the Nasdaq 100 and S&P 500 price action that, if bulls respond to, the door very much remains open for topside continuation.

This has been the most extreme of the three U.S. indices so I wanted to touch on this first. The rally pushed 13.5% at it’s peak and as of right now, prices are around 12.4% above the Tuesday low.

The Nasdaq 100 set a fresh monthly high along the way while breaking through a number of key resistance levels, many of which now become potential support.

The big zone of interest in the Nasdaq 100 spans between two Fibonacci levels at 14,500 and 14,375. This zone came into play last October as support and it quickly came back into the picture this year as resistance in late-January, support in early-February and then resistance again in mid-March.

But, this zone was only able to stall the advance ahead of last week’s close, and bulls have run right through that zone to continue the trend this week. This becomes a massive spot of importance for the rally as it will help us to see just how aggressive buyers remain to be. And from that, we can begin to gauge just how aggressive we should be in response.

A hold in this zone today keeps the door open for bullish continuation scenarios. If the zone doesn’t hold, there’s another possible spot of support around 14,183. For near-term resistance, the 14,669 level remains important, after which 14,816 and 14,993 (the 15k psychological level) come into view.

Chart prepared by James Stanley; Nasdaq 100 on Tradingview

Similar scenario in the S&P 500 although the move has been less-emphatic. The index did not set a fresh 10-month low ahead of the Fed but it did similarly begin to rally at the start of the presser, and it hasn’t really slowed down since.

Regarding support, prices are testing a zone of prior resistance that held the highs in early-January, the lows in early-February and then the highs again later in the month. I’m tracking this from 4460-4472. And similar to the above setup on the Nasdaq 100, this zone held the highs at the end of last week. Buyers forced a breakout yesterday and prices even trickled above the psychological level of 4500 for a bit.

But today brings the pullback and now is the test for just how aggressive buyers want to push this theme. Below this zone of support is another spot around the Fibonacci level around 4430, and below that is a prior price action swing at the psychological level of 4400.

On the resistance side, 4500 may have some follow-through resistance and beyond that is a big spot at 4530. Bigger picture, the zone at 4590-4600 looms large and there’s a spot along the way at 4550 that remains of interest.

Chart prepared by James Stanley; S&P 500 on Tradingview

The move in the Dow has been slower than the two above markets but, similarly, prices put in bullish price action with a recent higher-high. Looking beneath the surface, however, and there may be some attraction for bullish themes here.

Last Monday I highlighted that potential in the Dow as the index has built a symmetrical triangle formation. In and of itself, that’s just digestion and not really bullish, but the fact that it showed up around a major spot of support did make it more attractive for reversal scenarios. And the prices that I pointed out after the rate hike both came into play quickly as resistance.

At this point, the zone of support that I’m tracking on the index runs from 34,133 up to 34,250. A hold here keeps the door open for bullish continuation scenarios. On the topside of price action there’s one level that looms very large and it’s the 35k psychological level.

Chart prepared by James Stanley; Dow Jones on Tradingview

--- Written by James Stanley, Senior Strategist for DailyFX.com

Contact and follow James on Twitter: @JStanleyFX