Pan-Asia Catalysts/Events, Quiddity Advisors

Travis Lundy

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

<ul>
<li>The March 2023 Nikkei 225 Review was announced Friday. Discussion is in <a href="https://www.smartkarma.com/insights/nikkei-225-march-2023-review-olc-jal-renesas-in" target="_blank" data-smartkarma-citation="insights:97041" rel="noopener">Nikkei 225 March 2023 Review - OLC, JAL, Renesas IN.</a> </li>
<li>That means a Sep-2023 preview. ADDs: Lasertec (6920), Toshiba (6502), and Nitori (9843). DELETEs: Nippon Sheet Glass (5202), Mitsui E&amp;S (7003), and Matsui Securities (8628).</li>
<li>Zozo (3092) is a possible alternate add to Toshiba on a sector balance basis if Toshiba's disposition changes in the interim.</li>
</ul>


The March 2023 Nikkei 225 Review was announced Friday. Discussion is in Nikkei 225 March 2023 Review - OLC, JAL, Renesas IN. 
That means a Sep-2023 preview. ADDs: Lasertec (6920), Toshiba (6502), and Nitori (9843). DELETEs: Nippon Sheet Glass (5202), Mitsui E&amp;S (7003), and Matsui Securities (8628).
Zozo (3092) is a possible alternate add to Toshiba on a sector balance basis if Toshiba's disposition changes in the interim.


Nikkei 225 Sep 2023 PREVIEW - Lasertec, Toshiba, Nitori, Maybe Zozo

Research on International Stock Ideas, Value Punks

Value Punks

Research on International Stock Ideas

Value Punks’ mission is to deliver institutional-grade research on international stock ideas in a digestible, reader-friendly format.

At Value Punks, we blend our background in traditional value-investing with an openness to embrace a constantly and rapidly evolving investment and business landscape.

Institutional-Grade Research

Equity Bottom-Up

Berkshire Hathaway Inc Cl B / Equity Bottom-Up

This is Part 1 of our exclusive deep dive on “Sogo Shosha”, or Japanese trading companies.We’ve decided to break this deep dive into two parts given its length.Part 1 will build the foundation and covers the business, history, and a discussion of Berkshire’s investment.

This is Part 1 of our exclusive deep dive on “Sogo Shosha”, or Japanese trading companies.We’ve decided to break this deep dive into two parts given its length.Part 1 will build the foundation and covers the business, history, and a discussion of Berkshire’s investment.

Deep Dive: Japanese Trading Companies (Part 1)

<ul>
<li>There are four weeks left to go in the data period for calculating the next Nikkei 225 review for March, likely to be announced ~7 March 2023.</li>
<li>The 3 ADDs should be <a href="https://www.smartkarma.com/entities/oriental-land-co-ltd" target="_blank" data-smartkarma-citation="entities:13517:1" rel="noopener">Oriental Land (4661)</a>, <a href="https://www.smartkarma.com/entities/renesas-electronics-corp" target="_blank" data-smartkarma-citation="entities:15933:1" rel="noopener">Renesas Electronics (6723)</a> , and <a href="https://www.smartkarma.com/entities/japan-airlines-co-ltd" target="_blank" data-smartkarma-citation="entities:1184:1" rel="noopener">Japan Airlines (9201)</a>.  The 3 DELETES <a href="https://www.smartkarma.com/entities/toho-zinc-co-ltd" target="_blank" data-smartkarma-citation="entities:2796:1" rel="noopener">Toho Zinc (5707)</a> , <a href="https://www.smartkarma.com/entities/toyobo-co-ltd" target="_blank" data-smartkarma-citation="entities:6187:1" rel="noopener">Toyobo (3101)</a>, and <a href="https://www.smartkarma.com/entities/nippon-light-metal-holdings" target="_blank" data-smartkarma-citation="entities:1485:1" rel="noopener">Nippon Light Metal (5703)</a> </li>
<li>Oriental Land is the one to watch in March. Slight underperformance would boost buying impact. The Sep23 rebalance and subsequent ones are smaller in size but more interesting in impact.</li>
</ul>


There are four weeks left to go in the data period for calculating the next Nikkei 225 review for March, likely to be announced ~7 March 2023.
The 3 ADDs should be Oriental Land (4661), Renesas Electronics (6723) , and Japan Airlines (9201).  The 3 DELETES Toho Zinc (5707) , Toyobo (3101), and Nippon Light Metal (5703) 
Oriental Land is the one to watch in March. Slight underperformance would boost buying impact. The Sep23 rebalance and subsequent ones are smaller in size but more interesting in impact.


Nikkei 225 March Review - Quiddity Leaderboard (Jan 2023)

<ul>
<li>The Sep 2022 Nikkei 225 Annual Review has been announced. This was discussed in <a href="https://www.smartkarma.com/insights/nikkei-225-review-results-nidec-smc-hoya-in" target="_blank" data-smartkarma-citation="insights:80187" rel="noopener">Nikkei 225 Review Results: Nidec, SMC, Hoya IN</a>. </li>
<li>That means we can make early predictions for the March 2023 rebalance to be announced in six months. One way turnover would be about 1.4%. </li>
<li>The top three adds are Oriental Land, Renesas, and JAL. The top 3 sells would be Toyobo, Toho Zinc, and Nippon Sheet Glass. There are some dark horses here too.</li>
</ul>


The Sep 2022 Nikkei 225 Annual Review has been announced. This was discussed in Nikkei 225 Review Results: Nidec, SMC, Hoya IN. 
That means we can make early predictions for the March 2023 rebalance to be announced in six months. One way turnover would be about 1.4%. 
The top three adds are Oriental Land, Renesas, and JAL. The top 3 sells would be Toyobo, Toho Zinc, and Nippon Sheet Glass. There are some dark horses here too.


Nikkei 225 March 2023 Review Quiddity Leaderboard

In summer of 2016, I warned on Smartkarma that the BOJ was going to have to shift its ETF buy basket away from Nikkei 225. It did so in late 2016. I warned again in early 2018 that it was going to get worse, and suggested a revision to the Nikkei 225 Average methodology in <a href="https://www.smartkarma.com/insights/the-boj-s-ongoing-etf-impact-is-a-nikkei-225-reshuffle-in-the-cards" target="_blank" data-smartkarma-citation="insights:17331" rel="noopener">The BOJ's Ongoing ETF Impact - Is a Nikkei 225 Reshuffle in the Cards?</a> (followed by <a href="https://www.smartkarma.com/insights/japan-passive-boj-heading-for-trouble-with-nikkei-225" target="_blank" data-smartkarma-citation="insights:21980" rel="noopener">JAPAN PASSIVE:  BOJ Heading For Trouble with Nikkei 225</a>) whereby there would be a deemed minimum shares outstanding quantity so that Deemed Minimum Shares Out / Shares out multiplied by Existing Deemed Par Value would become NEW Deemed Par Value.
This would mean that some names would see lower weights, but on the whole, the Nikkei 225 basket would be much more liquid. 
Nothing was done. The BOJ again lowered its use of Nikkei 225 ETFs, then recently finally stopped using the average altogether. 
The Nikkei 225 had been made largely irrelevant by the Nikkei's refusal to adapt to the times.
<h2>The NEW News</h2>
Today after the close, the Nikkei Index Team announced the first proposed revision to the methodology of the Nikkei 225 Average in twenty years, and a consultation over the next five weeks. Because the concept of Par Value is no longer used in Japan in the Companies Act, it would get rid of the "Presumed Par Value" or "Deemed Par Value" for members and potential members of the Average, and replace it with a Price Adjustment Factor ("PAF") which is an inverse multiplier of the Deemed Par Value. 
In short.... it would do nothing to the index and its constituents as they stand today.
And new additions would be assigned a PAF which would presumably be related to their previously understood Deemed Par Value. But in any case, new constituents would be capped at 1% weightings so would see their Price Adjustment Factor.... adjusted. 
There are other changes proposed which change the rebalancing possibilities, and there is a note that the Average would only include members of TSE Prime (such that existing TSE1 and Nikkei 225 members which chose not to become members of TSE Prime would find themselves booted from the Nikkei 225. 
This is highly disappointing. A 20-year review could have been so much more interesting and the Nikkei could have rescued itself from effective oblivion. Alas, this misses the mark, by a wide margin. 
But details are details so we look at them below.

In summer of 2016, I warned on Smartkarma that the BOJ was going to have to shift its ETF buy basket away from Nikkei 225. It did so in late 2016. I warned again in early 2018 that it was going to get worse, and suggested a revision to the Nikkei 225 Average methodology in The BOJ's Ongoing ETF Impact - Is a Nikkei 225 Reshuffle in the Cards? (followed by JAPAN PASSIVE:  BOJ Heading For Trouble with Nikkei 225) whereby there would be a deemed minimum shares outstanding quantity so that Deemed Minimum Shares Out / Shares out multiplied by Existing Deemed Par Value would become NEW Deemed Par Value.
This would mean that some names would see lower weights, but on the whole, the Nikkei 225 basket would be much more liquid. 
Nothing was done. The BOJ again lowered its use of Nikkei 225 ETFs, then recently finally stopped using the average altogether. 
The Nikkei 225 had been made largely irrelevant by the Nikkei's refusal to adapt to the times.
The NEW News
Today after the close, the Nikkei Index Team announced the first proposed revision to the methodology of the Nikkei 225 Average in twenty years, and a consultation over the next five weeks. Because the concept of Par Value is no longer used in Japan in the Companies Act, it would get rid of the "Presumed Par Value" or "Deemed Par Value" for members and potential members of the Average, and replace it with a Price Adjustment Factor ("PAF") which is an inverse multiplier of the Deemed Par Value. 
In short.... it would do nothing to the index and its constituents as they stand today.
And new additions would be assigned a PAF which would presumably be related to their previously understood Deemed Par Value. But in any case, new constituents would be capped at 1% weightings so would see their Price Adjustment Factor.... adjusted. 
There are other changes proposed which change the rebalancing possibilities, and there is a note that the Average would only include members of TSE Prime (such that existing TSE1 and Nikkei 225 members which chose not to become members of TSE Prime would find themselves booted from the Nikkei 225. 
This is highly disappointing. A 20-year review could have been so much more interesting and the Nikkei could have rescued itself from effective oblivion. Alas, this misses the mark, by a wide margin. 
But details are details so we look at them below. 

After 20yrs, Nikkei 225 Proposes Minor Impact Rule Changes (Nintendo Disappointment?)

Japan

TADANO LTD. manufactures and sells various types of hydraulic cranes for construction and other industrial use.  The Company, through utilizing its own mechatronics technology, develops truck, all-terrain, and cargo cranes as well as non-crane equipment such as aerial platform trucks and lighting vehicles. The Company also manufactures pneumatic devices.

NTN CORPORATION manufactures a variety of bearings and machinery parts for industrial use.  The Company's products include bearings for office automation equipment, bearings, hubs, and joints for automobile engines, drive-train, suspension, and transmissions, clutch-related products, and precision machinery. NTN has sales networks in Japan and overseas.

Makino Milling Machine Co., Ltd. manufactures, sells, and repairs machining centers (MCs), electrical dischargers, numerical control (NC) milling machines, and other related industrial machinery.  The Company also produces die/mold manufacturing systems as well as Computer Aided Manufacturing (CAM) and Computer Aided Design (CAD) systems software to support its machine tools.

Namura Shipbuilding Co., Ltd. is a manufacturer of cargo vessels, tankers, and steel structures such as bridges and floodgates.  The Company also leases, repairs, and provides maintenance services.  As a group, Namura Shipbuilding operates a variety of businesses including software development, information systems sales, precision coil manufacturing, and catering and security services.

GLORY LTD. produces vending machines, coin-operated lockers, money handling machines, and data processing terminals.

MEIDENSHA CORPORATION manufactures electrical machinery used in the utilities, construction, metal, and transportation industries.  The Company produces heavy/light machinery including power generators, water treatment systems, control circuit devices, transformers, semiconductors, and material handling equipment such as carriages and pallet robots.

Nomura Micro Science Co., Ltd. manufactures and markets water treatment plants and equipments used for the filtration and purification of water. The company's products are mainly used for semiconductor and liquid crystal manufactures.

Mitsuboshi Belting Ltd processes rubber and other resin materials.  The Company's products are industrial belts, such as conveyor belts and V-belts. Mitsuboshi Belting also produces various interior and exterior goods for automobiles.

Mitsubishi Logisnext Co., Ltd. manufactures industrial vehicles and logistics systems. The Company's products include battery forklifts, unmanned forklifts, monorails, automated warehouses, powered moving shelves, and other logistics related products.

MAX CO., LTD. produces and sells office products and industrial equipment. The Company manufactures products such as electronic time recorders, staplers, lettering machines, typing tools, pneumatic nailers and industrial coil nailers.

Shanghai Bestway Marine Engineering Design Corporation Limited engages in proposal design, basic design, detail design, and production design of marine equipments. The Company also provides production supervision and technical service on site.

TriMas Corporation is a diversified manufacturer of proprietary products. The Company manufactures trailer products, recreational accessories, packaging systems, energy products and industrial specialty products for the commercial, manufacturing, and consumer markets.

Shenyang Blue Silver Industry Automatic Equipment Company Limited develops and applies industrial automation technology such as tires, metallurgy, energy, and machinery. The Company's main products include control system solutions, automation equipment, and production lines.

Shenyang Blue Silver Industry Ae (300293 CH)

HSD Engine Co., Ltd. is an integrated engine manufacturer specializing in producing diesel engine for large vessels. The Company provides business in diesel power plant construction and operation, engine parts sales, and engine maintenance and repair services.

Proto Labs, Inc. is low volume manufacturer of custom parts for prototyping and short-run production. The Company utilizes computer numerical control, machining and injection molding to manufacture custom parts for their customers. Proto Labs targets their services to product developers who use three-dimensional computer-aided design to develop products across a diverse range of end-markets.

Kenmec Mechanical Engineering Co., Ltd. manufactures and markets whole factory automated production line systems.  The Company's products include conveyor systems, automated storage and retrieval systems, car parking systems, as well as automatic guided vehicle systems.  Kenmec also produces electronic parts.

Wabash National Corporation manufactures semi trailers in North America. The company specializes in the design and production of dry freight vans, refrigerated vans, flatbed trailers, drop deck trailers, dump trailers, truck bodies and intermodal equipment.

Sam Engineering & Equipment (M) Bhd manufactures production equipment and aerospace products.  The Company produces manufacturing machinery including test handlers, laser mark handlers, material handling systems, vision inspection and automation solutions; and offers metal machining and sheet metal fabrication services.

Shuangliang Eco-Energy Systems Company Ltd. manufactures air conditioning products.  The Company produces flue gas lithium bromide absorption chillers, lithium bromide heat pump chillers, silicon gel absorption chillers, heat exchangers, and direct air cooled condensers.  Shuangliang Eco-Energy also manufactures sea water desalination equipment.

Shuangliang Eco Energy Systems (600481 CH)

Qinchuan Machine Tool & Tool Group Co. Ltd. manufactures and distributes numerical control machine tools and complex cutting tools. The Company produces cylindrical grinders, gear grinding machines, gear cutting tools, thread cutters, and measuring equipment. Qinchuan Machine Tool & Tool Group markets its products worldwide.

Qinchuan Mchn Tool & Tool Gp Shre (000837 CH)

Mitsui E&S Holdings Co., Ltd. engineers, builds, and repairs ships.  The Company also manufactures industrial machinery and equipment and builds power plants.  Mitsui Engineering & Shipbuilding also operates information systems services and real estate business.

Price Gauge
52-week Range	0.00 - 0.00
Market Cap (USDm)	0.00
P/E	0.00
Dividend (Yield)	0.00

Mitsui E&S Holdings (7003 JP)

Nikkei 225 Sep 2023 PREVIEW - Lasertec, Toshiba, Nitori, Maybe Zozo

The March 225 Rebalance is out so the Sep 2023 Review is fair game. I see three ADDs (Lasertec, Toshiba, and Nitori) and three DELETEs (Mitsui E&S,...

Travis Lundy

Deep Dive: Japanese Trading Companies (Part 1)

This is Part 1 of our exclusive deep dive on “Sogo Shosha”, or Japanese trading companies. We’ve decided to break this deep dive into two parts...

Value Punks

Nikkei 225 March Review - Quiddity Leaderboard (Jan 2023)

One month of data to go for the first March Nikkei 225 review in many, many, years. Oriental Land remains the top impact buy name, and it is quite...

Travis Lundy

Nikkei 225 March 2023 Review Quiddity Leaderboard

The Nikkei 225 Annual Review is announced. That means we can try to predict the March 2023 review. 3 auto adds 3 auto deletes are likely. Sep23 is...

Travis Lundy

After 20yrs, Nikkei 225 Proposes Minor Impact Rule Changes (Nintendo Disappointment?)

TWENTY YEARS after its last major index methodology review, the Nikkei has proposed changes to the Nikkei 225. Existing constituents are not...

Travis Lundy

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)