'Quantamental' Japan Specialist, LightStream Research

Campbell Gunn

'Quantamental' Japan Specialist

ja research

ja research is an independent research platform focused exclusively on Japanese equities. Leveraging data and graphic analysis provided by Japan Analytics, we provide insights on small and medium-sized companies that have been ignored by the sell-side as well as challenging conventional wisdom on larger companies. We also offer analyst and corporate access, the latter with translation if required. 

Thematic (Sector/Industry)

RELATIVE PRICE SCORE - The Relative Price Score (RPS) measures stock price performance relative to TOPIX and is calculated by comparing the current deviation with the mean absolute deviation of monthly and daily relative share prices. As all companies are, as a result, on a comparable scale, 'overbought' and 'oversold' outliers and changes in scoring can reveal short-term and longer-term trading opportunities. In addition, company data is cap-weight aggregated into Peer Group and Sector Relative Price Scores which can be used for allocation and timing. This insight will cover Sectors and Peer Groups; a forthcoming insight will update the list of overbought and oversold companies.<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/063/735/original/2018-09-11SML2.png?1536816473" class="editor-image img-responsive" data-smartkarma-image-id="63735"></figure><div class="content-caption">Source: Japan Analytics</div>OVERBOUGHT &amp; OVERSOLD SECTORS - Currently, three Sectors (Commercial Services, Consumer Services and Healthcare) are overbought, and two (Banks and Utilities) are oversold in terms of Relative Price Score.<div class="content-highlight">SECTOR RECOMMENDATIONS - Our most-preferred sectors remain Energy, Healthcare, Telecommunications, Other Commercial Products and Information Technology. Least-preferred sectors are Metals, Chemicals, Machinery, Autos, Construction, Real Estate, Building Materials, Food, Beverages &amp; Tobacco and Utilities. Our sector recommendations have an implicit 4 'unit' market short by being overweight five sectors and underweight nine and have 'outperformed' (gross of implementation costs) by 11.3% over the last three months and by 3.5% over the last month.</div><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/063/737/original/2018-09-13_14-33-09.png?1536816871" class="editor-image img-responsive" data-smartkarma-image-id="63737"></figure><div class="content-caption">Source: Japan Analytics</div>OVERBOUGHT PEER GROUPS - Currently, seventeen Peer Groups are 'overbought'.  Nine Peer Groups that were overbought at the end of May are no longer so - Beers, Wines &amp; Spirits, Paints, Safety Equipment, Wholesale-Household Equipment, Wholesale-Transport Equipment, Real Estate-Other Services, Software-Accounting &amp; Finance, Accounting Services and Investment Banking Services. Four Peer Groups have become overbought in the last three months - Telecom Engineering, IT Systems-Financial, Software-Development Services and Employment &amp; Staffing Services.<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/063/738/original/2018-09-13_14-36-04.png?1536816987" class="editor-image img-responsive" data-smartkarma-image-id="63738"></figure><div class="content-caption">Source: Japan Analytics</div>OVERSOLD PEER GROUPS - Currently ten Peer Groups are 'oversold'. The Kanto Regional Banks and Industrial REITs Peer Groups have become oversold in this period while the Kyushu Regional Banks, Retail REITs and Marine Transportation Peer Groups are no longer oversold. <div class="content-highlight">PEER GROUP RECOMMENDATIONS - Long and short recommendations for both overbought and oversold Peer Groups as well as lists of most and least preferred Peer Groups and suggested longs and shorts for some of each of those are detailed below. </div>

RELATIVE PRICE SCORE - The Relative Price Score (RPS) measures stock price performance relative to TOPIX and is calculated by comparing the current deviation with the mean absolute deviation of monthly and daily relative share prices. As all companies are, as a result, on a comparable scale, 'overbought' and 'oversold' outliers and changes in scoring can reveal short-term and longer-term trading opportunities. In addition, company data is cap-weight aggregated into Peer Group and Sector Relative Price Scores which can be used for allocation and timing. This insight will cover Sectors and Peer Groups; a forthcoming insight will update the list of overbought and oversold companies.Source: Japan AnalyticsOVERBOUGHT &amp; OVERSOLD SECTORS - Currently, three Sectors (Commercial Services, Consumer Services and Healthcare) are overbought, and two (Banks and Utilities) are oversold in terms of Relative Price Score.SECTOR RECOMMENDATIONS - Our most-preferred sectors remain Energy, Healthcare, Telecommunications, Other Commercial Products and Information Technology. Least-preferred sectors are Metals, Chemicals, Machinery, Autos, Construction, Real Estate, Building Materials, Food, Beverages &amp; Tobacco and Utilities. Our sector recommendations have an implicit 4 'unit' market short by being overweight five sectors and underweight nine and have 'outperformed' (gross of implementation costs) by 11.3% over the last three months and by 3.5% over the last month.Source: Japan AnalyticsOVERBOUGHT PEER GROUPS - Currently, seventeen Peer Groups are 'overbought'.  Nine Peer Groups that were overbought at the end of May are no longer so - Beers, Wines &amp; Spirits, Paints, Safety Equipment, Wholesale-Household Equipment, Wholesale-Transport Equipment, Real Estate-Other Services, Software-Accounting &amp; Finance, Accounting Services and Investment Banking Services. Four Peer Groups have become overbought in the last three months - Telecom Engineering, IT Systems-Financial, Software-Development Services and Employment &amp; Staffing Services.Source: Japan AnalyticsOVERSOLD PEER GROUPS - Currently ten Peer Groups are 'oversold'. The Kanto Regional Banks and Industrial REITs Peer Groups have become oversold in this period while the Kyushu Regional Banks, Retail REITs and Marine Transportation Peer Groups are no longer oversold. PEER GROUP RECOMMENDATIONS - Long and short recommendations for both overbought and oversold Peer Groups as well as lists of most and least preferred Peer Groups and suggested longs and shorts for some of each of those are detailed below. 

Japan: Most Overbought and Oversold - Relative Price Score Update - Sectors & Peer Groups

<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/061/034/original/2018-08-16_19-07-34.png?1534672507" class="editor-image img-responsive" data-smartkarma-image-id="61034"></figure><div class="content-caption">Source: Japan Analytics</div>A GOOD QUARTER - The Composite Results Score has now declined for seven months in a row and is implying a slowing of the upward momentum in earnings.  However, the score has only declined by 31 basis points since last quarter showing a degree of 'stability' seen only in 2011 in recent years.  The aggregate Forecast/Revision score has also continued to decline and is now lower for the fourth straight month. As would be expected, this score is a reliable leading indicator for the Results Score and suggests further weakening in the rate of earnings growth in the months ahead.  Neither score is, as yet, suggesting a decline in earnings before the end of the fiscal year.YEN CORRELATION WEAKENING - This quarter's earnings' stability was surprising given the relative strength of the Yen compared to a year ago. In the past and even as recently as 2016, a 5 per cent year-on-year decline has resulted in negative Results Scores. The year-on-year change in now positive so any negative impact will dissipate over the next two quarters.MARKET FOLLOWS MOMENTUM LOWER - The All Market Composite peaked on 23rd January and has since fallen by 11% despite a continuation of the Bank of Japan's ETF purchasing programme. Weakening earnings momentum and the overvaluation of many of the leading stocks, as in our '<a href="https://www.smartkarma.com/insights/japan-most-overbought-most-oversold-the-relative-price-score" target="_blank" data-smartkarma-citation="insights:21149">Nifty 50</a>' portfolio, have been contributing factors. With prospects for a much weaker Yen limited by the current trade negotiations between Japan and the United States, and with global growth slowing, we expect both Results and Revision Scores to trend lower, but to end the fiscal year in positive territory. Historically, the market has not risen during periods when both the Results and Forecast/Revision Scores have been trending down.<div class="content-highlight">MARKET RECOMMENDATION - Within a global portfolio, we would market-weight Japanese equities with a bias towards domestic sectors and not hedge the currency exposure.</div>SECTOR RESULTS SCORES -The good news is that only one sector, (Multi-Industry - 75% of which is <a href="https://www.smartkarma.com/entities/359" target="_blank" data-smartkarma-citation="entities:359:1">Japan Post [6178 JP</a>]) has a negative score - and its score is less negative than last quarter. Both the Media and Consumer Services sectors' scores turned positive and each increased by more than two points.  On the other hand, over half of our 29 sectors saw declining scores, although the number was lower than last quarter.  The top sectors in terms of quarter-on-quarter change were Energy, Consumer Services, Media, Information Technology and Other Commercial Products while the laggards were Non-Bank Finance, Chemicals, Construction, Machinery and Utilities. SECTOR REVISION SCORES - Five sectors have negative Forecast/Revision Scores with Utilities now joining Media, Multi-Industry, Autos and Banks from last quarter. The highest scores are in the Energy, Technology Hardware, Electrical Equipment, Retail and Information Technology sectors. Improvements of greater than one point were seen in Energy, Media and Machinery while Food, Beverages &amp; Tobacco, Chemicals, Utilities, Other Materials and Technology Hardware all lost more than one point. Overall eighteen sectors saw declines.REVISION V. RESULTS SCORES - The difference between the Results and Revision Scores is a good indicator of corporate expectations compared with the trailing-twelve-month reality. In some cases (e.g. Restaurants) the 'optimism' is due to a failure to revise forecasts in the light of weaker results. In others, such as Telecommunications, there is scope for upward revisions in the coming quarters.<div class="content-highlight">
THE OPTIMISTS
Restaurants • Other Materials • Electrical Equipment • Technology Hardware • Retail
THE PESSIMISTS
Banks • Autos • Telecommunications • Utilities • Media • Chemicals
</div>SECTOR PERFORMANCE - Over the last three months, our Japan Market Composite declined by 5.8%. Only four sectors saw an increase in value led by Telecommunications, Energy, Commercial Services and Information Technology. The largest declines were in the Building Materials, Metals, Real Estate Construction and Machinery sectors. Nine sectors are now negative over one year led by Building Materials, Metals and Food, Beverages &amp; Tobacco and only eight are up in double-digits led by Services and Information Technology. For the time being, Domestic Non-Manufacturing sectors 'rules the roost' and Domestic Cyclical sectors have taken over from Global Cyclicals in the 'doghouse'.'.<div class="content-highlight">
SECTOR RECOMMENDATIONS
Our most-preferred sectors are currently Energy, Healthcare, Telecommunications, Other Commercial Products and Information Technology.
Least-preferred sectors are Metals, Chemicals, Machinery, Autos, Construction, Real Estate, Building Materials, Food Beverages &amp; Tobacco and Utilities.
</div>TOP 5 LARGER PEER GROUPS - The top five Peer Groups capitalised at over ¥1 trillion are Machine Tools &amp; Presses, PC &amp; Computer Peripherals, Oil &amp; Gas Refining &amp; Marketing, Telecom Distribution Services and Sporting &amp; Outdoor Goods. The top twenty larger Peer Groups have gained 16% over one year but have declined by 4% on average the last three months.BOTTOM 5 LARGER PEER GROUPS - The bottom five Peer Groups capitalised at over ¥1 trillion are Audio/Visual Content, LCD/LED Materials &amp; Equipment, Electrical Engineering, General Contractors and Real Estate - Leasing. The bottom twenty larger Peer Groups have lost 2% over one year and 9% over the last three months. Only Security Services and Tobacco have risen since May.<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/061/038/original/2018-08-19_19-33-03.png?1534674804" class="editor-image img-responsive" data-smartkarma-image-id="61038"></figure>

Source: Japan AnalyticsA GOOD QUARTER - The Composite Results Score has now declined for seven months in a row and is implying a slowing of the upward momentum in earnings.  However, the score has only declined by 31 basis points since last quarter showing a degree of 'stability' seen only in 2011 in recent years.  The aggregate Forecast/Revision score has also continued to decline and is now lower for the fourth straight month. As would be expected, this score is a reliable leading indicator for the Results Score and suggests further weakening in the rate of earnings growth in the months ahead.  Neither score is, as yet, suggesting a decline in earnings before the end of the fiscal year.YEN CORRELATION WEAKENING - This quarter's earnings' stability was surprising given the relative strength of the Yen compared to a year ago. In the past and even as recently as 2016, a 5 per cent year-on-year decline has resulted in negative Results Scores. The year-on-year change in now positive so any negative impact will dissipate over the next two quarters.MARKET FOLLOWS MOMENTUM LOWER - The All Market Composite peaked on 23rd January and has since fallen by 11% despite a continuation of the Bank of Japan's ETF purchasing programme. Weakening earnings momentum and the overvaluation of many of the leading stocks, as in our 'Nifty 50' portfolio, have been contributing factors. With prospects for a much weaker Yen limited by the current trade negotiations between Japan and the United States, and with global growth slowing, we expect both Results and Revision Scores to trend lower, but to end the fiscal year in positive territory. Historically, the market has not risen during periods when both the Results and Forecast/Revision Scores have been trending down.MARKET RECOMMENDATION - Within a global portfolio, we would market-weight Japanese equities with a bias towards domestic sectors and not hedge the currency exposure.SECTOR RESULTS SCORES -The good news is that only one sector, (Multi-Industry - 75% of which is Japan Post [6178 JP]) has a negative score - and its score is less negative than last quarter. Both the Media and Consumer Services sectors' scores turned positive and each increased by more than two points.  On the other hand, over half of our 29 sectors saw declining scores, although the number was lower than last quarter.  The top sectors in terms of quarter-on-quarter change were Energy, Consumer Services, Media, Information Technology and Other Commercial Products while the laggards were Non-Bank Finance, Chemicals, Construction, Machinery and Utilities. SECTOR REVISION SCORES - Five sectors have negative Forecast/Revision Scores with Utilities now joining Media, Multi-Industry, Autos and Banks from last quarter. The highest scores are in the Energy, Technology Hardware, Electrical Equipment, Retail and Information Technology sectors. Improvements of greater than one point were seen in Energy, Media and Machinery while Food, Beverages &amp; Tobacco, Chemicals, Utilities, Other Materials and Technology Hardware all lost more than one point. Overall eighteen sectors saw declines.REVISION V. RESULTS SCORES - The difference between the Results and Revision Scores is a good indicator of corporate expectations compared with the trailing-twelve-month reality. In some cases (e.g. Restaurants) the 'optimism' is due to a failure to revise forecasts in the light of weaker results. In others, such as Telecommunications, there is scope for upward revisions in the coming quarters.
THE OPTIMISTS
Restaurants • Other Materials • Electrical Equipment • Technology Hardware • Retail
THE PESSIMISTS
Banks • Autos • Telecommunications • Utilities • Media • Chemicals
SECTOR PERFORMANCE - Over the last three months, our Japan Market Composite declined by 5.8%. Only four sectors saw an increase in value led by Telecommunications, Energy, Commercial Services and Information Technology. The largest declines were in the Building Materials, Metals, Real Estate Construction and Machinery sectors. Nine sectors are now negative over one year led by Building Materials, Metals and Food, Beverages &amp; Tobacco and only eight are up in double-digits led by Services and Information Technology. For the time being, Domestic Non-Manufacturing sectors 'rules the roost' and Domestic Cyclical sectors have taken over from Global Cyclicals in the 'doghouse'.'.
SECTOR RECOMMENDATIONS
Our most-preferred sectors are currently Energy, Healthcare, Telecommunications, Other Commercial Products and Information Technology.
Least-preferred sectors are Metals, Chemicals, Machinery, Autos, Construction, Real Estate, Building Materials, Food Beverages &amp; Tobacco and Utilities.
TOP 5 LARGER PEER GROUPS - The top five Peer Groups capitalised at over ¥1 trillion are Machine Tools &amp; Presses, PC &amp; Computer Peripherals, Oil &amp; Gas Refining &amp; Marketing, Telecom Distribution Services and Sporting &amp; Outdoor Goods. The top twenty larger Peer Groups have gained 16% over one year but have declined by 4% on average the last three months.BOTTOM 5 LARGER PEER GROUPS - The bottom five Peer Groups capitalised at over ¥1 trillion are Audio/Visual Content, LCD/LED Materials &amp; Equipment, Electrical Engineering, General Contractors and Real Estate - Leasing. The bottom twenty larger Peer Groups have lost 2% over one year and 9% over the last three months. Only Security Services and Tobacco have risen since May.

Japan: Results & Revision Scores Summer 2018 Update - Market Composite, Sectors & Peer Groups

Fintech, Real-time Big-Data Analytics Provider, Nowcast, Inc.

Ryota Hayashi

Fintech, Real-time Big-Data Analytics Provider

Nowcast, Inc.

We at Nowcast develop "Big-Data Economic Analytics Platforms".  We aim to revolutionize the financial markets by providing "accurate" and "real-time" analytics based on economic indicators and corporate activity data procured worldwide. 

Our Main Services

(1) Real-time Analytics
With our Nikkei CPI Now Index at our core, we provide real time analytics of global economic indicators such as POS Data. By utilizing Big-Data technology, we also provide real-time analytics of micro level data such as corporate earnings. 

(2) Big-Data Application Consulting
We too provide business consultation and conduct joint research on initiatives that strive to use data, such as from the operation capacity of construction machinery to number of passengers on railroad trains, as economic indicators. We provide continuous support to Data Scientists specialized in economics in their proposal stage, product development and up till its business development. 

(3) Monetary Policy Insights
With the proactive involvement of and support from from academicians in macroeconomics & key figures in the financial industry, we produce reports, conduct seminars and meetings that discuss about the forecast of financial markets, provide intellectual suggestions on asset allocation, etc. 

Macroeconomics

<ul class="ember-tether-target ember-tether-element-attached-top ember-tether-element-attached-left ember-tether-target-attached-top ember-tether-target-attached-right"><li>"Nikkei CPINow" is a statistical database produced by Nowcast Inc. that provides real-time economic statistics using so-called “big data” gathered on a real-time basis; making it possible to “nowcast” economic developments, that is, to gauge them almost in real time.</li><li>Nikkei CPINow was launched in January 2016, disseminating the new “CPINow” price indeces, which succeeds and improves upon the Nikkei UTokyo Daily Price Index.</li><li>This December 2016 Review looks into analyzing the current developments in Japan's economy based on The Nikkei CPINow S index &amp; T index.</li></ul>

"Nikkei CPINow" is a statistical database produced by Nowcast Inc. that provides real-time economic statistics using so-called “big data” gathered on a real-time basis; making it possible to “nowcast” economic developments, that is, to gauge them almost in real time.Nikkei CPINow was launched in January 2016, disseminating the new “CPINow” price indeces, which succeeds and improves upon the Nikkei UTokyo Daily Price Index.This December 2016 Review looks into analyzing the current developments in Japan's economy based on The Nikkei CPINow S index &amp; T index.

December 2016 Review of Current Developments in Japan's Economy

Japan TMT Analyst

Pelham Smithers

Market Intel on Asian Tech with a Japan focus

Pelham Smithers Associates

Founded in 2009, Pelham Smithers Associates (PSA) provides market intelligence on Asian technology, focusing in particular on Japan. The industries covered by our team of specialists are: consumer electronics, telecomms, pharmaceuticals, internet, electronic parts and materials, automotive technology, retail and capital goods. 

Research is provided by the following:
Pelham Smithers: Macro, consumer electronics, telecoms & pharma
Joel Scheiman: Electronics materials / components
Julie Boote: Autos
Will Nestuk: Capital goods, machinery & transportation equipment parts
Thao Nguyen: eCommerce, internet content, marketing & advertising

While it is not a given that a switch from a high growth, high interest rate environment to a low growth, low interest rate environment is a good one for equities in general, it should be good for defensive stocks, because these are the most bond-like of equities and the switch almost defines a fixed income bull market. Japan may not have been particularly high growth or high interest rate in 2000, but it was certainly higher growth and higher interest rate than today, and it is no surprise that defensive sectors like foods (+210% relative to Topix since 1999) and pharmaceuticals (+160%) have done very well over this time. The question, now, is whether this is set to continue, or whether we might have hit a turning point.

While it is not a given that a switch from a high growth, high interest rate environment to a low growth, low interest rate environment is a good one for equities in general, it should be good for defensive stocks, because these are the most bond-like of equities and the switch almost defines a fixed income bull market. Japan may not have been particularly high growth or high interest rate in 2000, but it was certainly higher growth and higher interest rate than today, and it is no surprise that defensive sectors like foods (+210% relative to Topix since 1999) and pharmaceuticals (+160%) have done very well over this time.  The question, now, is whether this is set to continue, or whether we might have hit a turning point.

Founder and CEO, Europacifica Consulting

Naomi Fink

Founder and CEO

Europacifica Consulting

As <a href="https://www.smartkarma.com/insights/boj-the-80-trillion-yen-question" target="_blank">forecast by Europacifica</a>, BOJ offered symbolic (modest) easing today.- Though it left overnight rates at -0.1%, the BOJ increased its <a href="https://www.boj.or.jp/en/announcements/release_2016/k160729a.pdf" target="_blank">ETF purchases</a> from JPY3.3trn to JPY6trn by a 7-2 majority vote.  - As anticipated, the BOJ refrained from extreme policies such as unlimited monetisation of government debt ("helicopter money").  - The BOJ also declined to further distort the measure of inflation expectations encapsulated in the JGBi market, or to pressure liquidity further by increasing the…

As forecast by Europacifica, BOJ offered symbolic (modest) easing today.- Though it left overnight rates at -0.1%, the BOJ increased its ETF purchases from JPY3.3trn to JPY6trn by a 7-2 majority vote.  - As anticipated, the BOJ refrained from extreme policies such as unlimited monetisation of government debt ("helicopter money").  - The BOJ also declined to further distort the measure of inflation expectations encapsulated in the JGBi market, or to pressure liquidity further by increasing the…

BOJ Outcome: Symbolic Stimulus (As We Predicted)

Japan

NICHIREI CORPORATION produces and distributes frozen food, ice, and meat products.  The Company also provides a variety of cold storage services, as well as manages leasing business for buildings and parking garages.

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Nichirei Corp (2871 JP)

Japan: Most Overbought and Oversold - Relative Price Score Update - Sectors & Peer Groups

RELATIVE PRICE SCORE - The Relative Price Score (RPS) measures stock price performance relative to TOPIX and is calculated by comparing the current...

Campbell Gunn

Japan: Results & Revision Scores Summer 2018 Update - Market Composite, Sectors & Peer Groups

A GOOD QUARTER - The Composite Results Score has now declined for seven months in a row and is implying a slowing of the upward momentum in...

Campbell Gunn

December 2016 Review of Current Developments in Japan's Economy

"Nikkei CPINow" is a statistical database produced by Nowcast Inc. that provides real-time economic statistics using so-called “big data”...

Nowcast, Inc.

Death Rattle for Defensives?

While it is not a given that a switch from a high growth, high interest rate environment to a low growth, low interest rate environment is a good...

Pelham Smithers Associates

BOJ Outcome: Symbolic Stimulus (As We Predicted)

As forecast by Europacifica, BOJ offered symbolic (modest) easing today.- Though it left overnight rates at -0.1%, the BOJ increased its ETF...

Naomi Fink

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