'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. 

Cross Asset Strategy

TW3 NORTH ASIA 22-27 JUNESmartkarma's North Asian Insight providers produced 28 new Insights this week, mostly focused on a deluge of 'events' and the start of the, mostly first quarter, earnings announcements. The tone was overwhelmingly 'bullish' with only six 'bearish' notes, despite the weaker trends in earnings and the simmering trade and reparation disputes between the two nations.EVENT - DRIVEN

Sanghyun Park provides summaries of the rumour mills surrounding Naver Corp (035420 KS), the Naver Financial offering, Jieum and the possible diminution of LINE (3938 JP)'s role in the evolution of the group as well as the potential for  SK Telecom (017670 KS) to acquire the Asiana group companies and the resulting conversion of SKT into a holding company.

Travis Lundy and LightStream Research noted the 'short squeeze' taking place following Chiyoda Corp (6366 JP)'s removal from the Nikkei 225 (NKY INDEX) - the shares rose by 8.7% over the week.
Travis also covered three highly-unusual contested and hostile 'J-on-J" corporate actions currently unfolding. One 'white knight' has already emerged, while another two could be appearing over the horizon - a busy time for Japan's IBs:- 

Askul/Yahoo Japan -  Askul has accused YJ of lying as to its intentions surrounding the future of their JV company LOHACO and their move to have Askul's CEO dismissed - Askul has requested a dissolution of their tie-up and could be seeking a white knight

UNIZO/HIS - UNIZO has, so far, been unable to respond in writing to HIS's Tender Offer of 11th July and requires 'more information' from the Offeror. UNIZO in buying some more time is likely to be preparing a revised RNAV and probably also seeking a white knight given HIS's lack of real estate chops.

Star Asia/Sakura Sogo REIT/Mirai - This J-REIT 'event' is already a 'threesome' however the lack of any merger terms, the nonsense of the potential for abuse in the 'Deemed Approval' of non-voting shareholders and the blatant self-interest of the Sakura Soo sponsors are further glaring lacunae in Japanese corporate governance (sic)


The Asahi Group (2502 JP) acquisition of ABInBev's Australian operation CUB was deemed positive and value accretive by LightStream Research but Arun George points out that the price already factors in ambitious targets for further share gains.
Lastly, Travis Lundy recommends buying the Sanyo Chemical (4471 JP)  / Nippon Shokubai (4114 JP) 'ratio' with upsides ranging from 7% to 34%, while LightStream Research continue to applaud Denso Corp (6902 JP) further moves into autonomous driving after establishing a chip JV with Toyota Motor (7203 JP).
EQUITY BOTTOM-UP    

Douglas Kim explores the three catalysts driving Hite Jinro (000080 KS) at present - a beneficiary of the South Korean boycott of all things Japanese and then correlates Samsung Electronics (SMSD LI) with trends in US bond markets and reaches a bearish conclusion

LightStream Research thinks Money Forward (3994 JP)'s new pricing plan will result in 45% three-year annual compound revenue growth which would take the company to breakeven but would wait before investing.

Kirk Boodry looks at Softbank Group (9984 JP)'s Vision Fund II, while Michael Causton surveys the task ahead for Fast Retailing (9983 JP)'s new and first female CEO and new stores opening in Shibuya and Shinsaibashi for J Front Retailing (3086 JP)

 Lastly, J. Brian Waterhouse looks at the beleaguered Fukushima Bank (8562 JP) whose largest shareholder is another listed company - Prospect Co Ltd (3528 JP) - although they are classified as a 'foreign' shareholder as the shares were originally held in the Prospect Japan Fund which has now been acquired by Prospect
 RESULTS COMMENTARY

LightStream Research maintains their bullish recommendations on both Shin Etsu Chemical (4063 JP) and Nidec (6594 JP), despite the latter's 'underwhelming' results, while also 'staying loyal to Nissan Motor (7201 JP) as they steer well clear of a Renault SA (RNO FP)-led future. They consider Toyota Motor (7203 JP) as they clear leader in the global auto industry.

Douglas Kim updated us on Naver Corp (035420 KS)'s second quarter and reviewed the Naver Financial spin-off and concludes that 'things are looking up' for the company and the CEO, Han Seong-Sook.
Bearish notes appeared from Kirk Boodry on NTT Docomo Inc (9437 JP) (although he views Docomo's woes as good news for rivals KDDI Corp (9433 JP) and Softbank Group (9984 JP), while Scott Foster highlights the potential 20% downside risk in Keyence (6861 JP) whose first-quarter results sale the first downturn in sales and profits since 2010.
THEMATIC &amp; STRATEGYA somewhat prolific week for Douglas Kim saw him round off with two strategy notes, the first a bullish Insight on Korean telecom companies in light of the rollout of 5G and a reminder that the likely date for the announcement of Sout Korea's exclusion from Japan's 'whitelist' of preferred trading counterparties will be between August 2nd and August 9th. He remains pessimistic on the outlook for the Korean market.      EVENT DRIVEN: BULLISHSanyo Chem - Nippon Shokubai Merger Ratio Is a BUY ASKUL vs Yahoo Japan - Receipts Provided LINE, Naver &amp; LHJ's Jieum: Local Speculations SKT's Asiana Takeover &amp; Intermediate Holdco Conversion Timeframe Chiyoda: Squeeze Coming Through Chiyoda in Full Squeeze - For Now Another Move by Denso to Accelerate Its ADAS Game Asahi to Acquire Carlton &amp; United Breweries: Positive for Asahi Not so for AB InBev UNIZO Board Statement on HIS Tender - No Opinion Yet Naver Financial ECO: Meaning for LINE EVENT DRIVEN: BEARISHAsahi Group: The Acquisition and the Hangover Sakura Sogo/Mirai: White Knight Guess The Ratio Isn't Easy PickingsEQUITY BOTTOM-UP: BULLISHHiteJinro: 3 Catalysts - Japanese Beer Boycott, Soju Price Increase, &amp; "Tesla" The Drink Money Forward’s New Pricing Plan Could Be Its First Step in the Path to Profitability Softbank Group: Another Step Closer to Vision Fund 2 Uniqlo’s First Female CEO Gets the Job of Managing the Cull of Stores at Home J Front Retailing Aims High with New Builds in Shibuya and Shinsaibashi EQUITY BOTTOM-UP: BEARISHKOSPI Vs. Samsung Electronics at Different Stages of the Bond Yield Differentials Fukushima Bank (8562 JP) - Living on the EdgeRESULTS COMMENTARY:  BULLISHNidec: Underwhelming 1Q But OP Recovery in PlaceNaver - The Spin-Off of Naver Financial Business &amp; Major Highlights of 2Q19 Results Shin-Etsu: Solid Growth in Semiconductor Silicon Despite Declining Memory Market Nissan: Nissan Taking Its Medicine Is Making Toyota Healthier MonotaRO (3064 JP): 1H Results on Track, but Margins Declining RESULTS COMMENTARY:  BEARISHDoCoMo Q1 19 - New Tariffs Impact Profit/User Interest Low/Good for KDDI &amp; Softbank Keyence (6861 JP): Downturn Confirmed THEMATIC &amp; STRATEGY: BULLISHThe 5G Service Rollout Update &amp; Earnings Preview of Korean Telcos in 2Q19 THEMATIC &amp; STRATEGY: BEARISHExclusion of South Korea from Japan's "Whitelist" Of Countries: D-Day - August 2nd? 

🇰🇷🇯🇵 That Was The Week That Was • North Asia 22nd-27th July 2019 @Smartkarma

Expert on Japan Retail and Consumer Markets, JapanConsuming

Michael Causton

Expert on Japan Retail and Consumer Markets

Real Insight on Japanese Consumer Markets

JapanConsuming

JapanConsuming is a specialist research firm producing intelligence on Japanese retail and consumer markets. Founded in 2000, JapanConsuming has become the leading provider of insights on Japanese retailers and consumer trends to retailers, brands, government agencies and investors. As well as a highly regarded monthly report on the market, JapanConsuming produces in-depth reports on retail sectors, seminars on key trends and telephone consulting to investors on trends and retailers.

JapanConsuming was founded by Michael Causton and Roy Larke. 

Equity Bottom-Up

<a href="https://www.smartkarma.com/entities/fast-retailing-co-ltd" target="_blank" data-smartkarma-citation="entities:751:1" rel="noopener">Fast Retailing (9983 JP)</a> appointed the first female CEO at Uniqlo last month, making Maki Akaida the only woman to lead one of Japan’s top retail companies.Akaida has a strong leadership record over almost 20 years at the retailer and has the confidence of founder and chairman, Tadashi Yanai.Her appointment comes as the chain is adjusting to a shrinking market at home and the start of a major shift in store strategy that will mean little growth but potentially higher margins.

Fast Retailing (9983 JP) appointed the first female CEO at Uniqlo last month, making Maki Akaida the only woman to lead one of Japan’s top retail companies.Akaida has a strong leadership record over almost 20 years at the retailer and has the confidence of founder and chairman, Tadashi Yanai.Her appointment comes as the chain is adjusting to a shrinking market at home and the start of a major shift in store strategy that will mean little growth but potentially higher margins.

Uniqlo’s First Female CEO Gets the Job of Managing the Cull of Stores at Home

Pan-Asia Index Rebalances/ Events/ Delta One, Periscope Analytics

Brian Freitas

Pan-Asia Index Rebalances/ Events/ Delta One

Quantitative Analysis

The Japan Exchange Group (JPX) publishes a daily report that details the short sell activity by market participants. Investors are required to submit their short sale position to the brokers when their short positions exceed 0.20% of the outstanding shares. The brokers then pass the short position reports to the exchange. JPX aggregates the reports and discloses information such as the short sale positions, the names of the investors etc. whose short sale positions reach 0.5% of the outstanding shares.The largest short positions in notional terms are <a href="https://www.smartkarma.com/entities/fast-retailing-co-ltd" target="_blank" rel="noopener" data-smartkarma-citation="entities:751:1">Fast Retailing (9983 JP)</a>, <a href="https://www.smartkarma.com/entities/takeda-pharmaceutical-co-ltd" target="_blank" rel="noopener" data-smartkarma-citation="entities:11747:1">Takeda Pharmaceutical (4502 JP)</a>, <a href="https://www.smartkarma.com/entities/itochu-corp" target="_blank" rel="noopener" data-smartkarma-citation="entities:18448:1">Itochu Corp (8001 JP)</a>, <a href="https://www.smartkarma.com/entities/toyota-motor-corp" target="_blank" rel="noopener" data-smartkarma-citation="entities:73:1">Toyota Motor (7203 JP)</a> and <a href="https://www.smartkarma.com/entities/canon-inc" target="_blank" rel="noopener" data-smartkarma-citation="entities:1:1">Canon Inc (7751 JP)</a> while the largest short positions as a percentage of free float are <a href="https://www.smartkarma.com/entities/leopalace21-corp" target="_blank" rel="noopener" data-smartkarma-citation="entities:8244:1">Leopalace21 Corp (8848 JP)</a>, <a href="https://www.smartkarma.com/entities/taiyo-yuden-co-ltd" target="_blank" rel="noopener" data-smartkarma-citation="entities:9924:1">Taiyo Yuden (6976 JP)</a>, <a href="https://www.smartkarma.com/entities/tokai-carbon-co-ltd" target="_blank" rel="noopener" data-smartkarma-citation="entities:9145:1">Tokai Carbon (5301 JP)</a> and <a href="https://www.smartkarma.com/entities/nippon-carbon-co-ltd" target="_blank" rel="noopener" data-smartkarma-citation="entities:3348:1">Nippon Carbon (5302 JP)</a>. The upcoming Nikkei deletion name <a href="https://www.smartkarma.com/entities/chiyoda-corp" target="_blank" rel="noopener" data-smartkarma-citation="entities:6232:1">Chiyoda Corp (6366 JP)</a> has 17.2% of its free float short sold and there should be a fair bit of volatility in the lead up to the rebalance.

The Japan Exchange Group (JPX) publishes a daily report that details the short sell activity by market participants. Investors are required to submit their short sale position to the brokers when their short positions exceed 0.20% of the outstanding shares. The brokers then pass the short position reports to the exchange. JPX aggregates the reports and discloses information such as the short sale positions, the names of the investors etc. whose short sale positions reach 0.5% of the outstanding shares.The largest short positions in notional terms are Fast Retailing (9983 JP), Takeda Pharmaceutical (4502 JP), Itochu Corp (8001 JP), Toyota Motor (7203 JP) and Canon Inc (7751 JP) while the largest short positions as a percentage of free float are Leopalace21 Corp (8848 JP), Taiyo Yuden (6976 JP), Tokai Carbon (5301 JP) and Nippon Carbon (5302 JP). The upcoming Nikkei deletion name Chiyoda Corp (6366 JP) has 17.2% of its free float short sold and there should be a fair bit of volatility in the lead up to the rebalance.

<div class="content-caption">
<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/093/001/original/2019-07-13_16-16-31.png?1563002212" class="editor-image img-responsive" data-smartkarma-image-id="93001"></figure><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/093/005/original/2019-07-13_16-25-24.png?1563002742" class="editor-image img-responsive" data-smartkarma-image-id="93005"></figure>Source: Japan Analytics
</div>MOVING AVERAGE BREAKOUT - Japanese equities have now risen by 5.1% since the low of 4th June and, since July 1st, the Total Market Value has exceeded the 50-Day Moving Average for the first time since 26th April. Over the last two weeks, the Total Market Value has gained 1.7% in both Yen and US dollar times. For the previous twelve months, the equity market has moved in line with the US dollar/Japanese Yen exchange rate. It remains to be seen how the 'gap' that has opened up in the last month will be closed. Any further strength in the Yen from current levels will likely see the market slip below the 50-Day Moving Average again.<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/093/020/original/2019-07-14_06-28-16.png?1563053334" class="editor-image img-responsive" data-smartkarma-image-id="93020"></figure><div class="content-caption">
<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/093/024/original/2019-07-14_06-45-29.png?1563054338" class="editor-image img-responsive" data-smartkarma-image-id="93024"></figure> Source: Japan Analytics</div>VALUE TRADED RATIO - The Value Traded Ratio (Value Traded/Total Market Value) has seen two new eighteen-month lows. If the three days around Christmas are excluded, the current apathy towards Japanese equities is the most extreme since 2012 and is confirmed by recent BAML investor surveys. In the past, such periods of inactivity (marked"▲"above)  have preceded changes in market direction, more often upwards rather than downwards and suggest the current rally has more 'legs'. <div class="content-caption">
<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/093/025/original/2019-07-14_06-47-40.png?1563054585" class="editor-image img-responsive" data-smartkarma-image-id="93025"></figure> Source: Japan Analytics</div>TORAKU INDEX - Conversely, the Toraku advance/decline index is suggesting a degree of caution having breached the 120 'overbought' line for only the third time in eighteen months. Combining this analysis with the Value Traded Ratio, there is scope for a short-term upward move akin to that of October 2018 to be followed by a sharper downward trend into the autumn.  <div class="content-caption">
<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/093/026/original/2019-07-14_06-54-51.png?1563054906" class="editor-image img-responsive" data-smartkarma-image-id="93026"></figure> Source: Japan Analytics</div>VOLUME SCORE TIMELINE - The lull in market turnover is confirmed in the greener 'bias' in our Sector volume timeline. The Retail and Restaurant Sectors are hot as we are in the middle of the quarterly results announcements for February/May/August/November year-end companies. REITs remain the 'go-to' defensive Sector while the Information Technology and Internet Sectors are the 'tema-du-jour' - to mix language metaphors. The 'untouchables' are Metals, Banks, UtilitiesTransportation,  and Multi-Industry.<div class="content-caption">
<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/093/028/original/2019-07-14_07-31-40.png?1563057109" class="editor-image img-responsive" data-smartkarma-image-id="93028"></figure> Source: Japan Analytics</div>3-MONTH SECTOR CONTRIBUTION - Over the last three months, a long Telcos/short Autos strategy would have yielded 82 basis points of performance. The Retail Sector has responded well to the results released so far led by drugstores <a href="https://www.smartkarma.com/entities/welcia-holdings-co-ltd" target="_blank" data-smartkarma-citation="entities:20895:1" rel="noopener">Welcia (3141 JP)</a> and <a href="https://www.smartkarma.com/entities/tsuruha-holdings-inc" target="_blank" data-smartkarma-citation="entities:9536:1" rel="noopener">Tsuruha (3391 JP), </a><a href="https://www.smartkarma.com/entities/fast-retailing-co-ltd" target="_blank" data-smartkarma-citation="entities:751:1" rel="noopener">Fast Retailing (9983 JP)</a><a href="https://www.smartkarma.com/entities/tsuruha-holdings-inc" target="_blank" data-smartkarma-citation="entities:9536:1" rel="noopener">, and </a><a href="https://www.smartkarma.com/entities/lawson-inc" target="_blank" data-smartkarma-citation="entities:1040:1" rel="noopener">Lawson (2651 JP)</a>. Electrical Equipment has suffered from weakness in component stocks <a href="https://www.smartkarma.com/entities/alps-alpine-co-ltd" target="_blank" data-smartkarma-citation="entities:12001:1" rel="noopener">Alps Alpine (6770 JP)</a> (-38% over one year), <a href="https://www.smartkarma.com/entities/murata-manufacturing-co-ltd" target="_blank" data-smartkarma-citation="entities:11649:1" rel="noopener">Murata (6981 JP)</a> (see <a href="https://www.smartkarma.com/profiles/scott-foster" target="_blank" data-smartkarma-citation="accounts:1134" rel="noopener">Scott Foster</a>'s <a href="https://www.smartkarma.com/insights/murata-mfg-6981-jp-buy-on-decline-for-the-long-term" target="_blank" data-smartkarma-citation="insights:30919" rel="noopener">(Buy on Decline for the Long Term</a>), and <a href="https://www.smartkarma.com/entities/taiyo-yuden-co-ltd" target="_blank" data-smartkarma-citation="entities:9924:1" rel="noopener">Taiyo Yuden (6976 JP)</a>, while <a href="https://www.smartkarma.com/entities/smc-corp" target="_blank" data-smartkarma-citation="entities:20866:1" rel="noopener">SMC (6273 JP)</a>, <a href="https://www.smartkarma.com/entities/fanuc-corp" target="_blank" data-smartkarma-citation="entities:752:1" rel="noopener">Fanuc (6954 JP)</a>, and <a href="https://www.smartkarma.com/entities/komatsu-ltd" target="_blank" data-smartkarma-citation="entities:8416:1" rel="noopener">Komatsu (6301 JP)</a> have weighed on the Machinery Sector.<div class="content-caption">
<figure class="editor-figure mceNonEditable"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/093/031/original/2019-07-14_07-44-47.png?1563057897" class="editor-image img-responsive" data-smartkarma-image-id="93031"></figure></figure> Source: Japan Analytics</div>SECTOR SCORE MATRIX - Arranging our cap-weighted Sector Relative Price Scores and Results &amp; Revisions Scores in a four-quadrant matrix whose extremes are Contrarian Sell, Contrarian Buy, Unrequited Growth, and Ex-Growth suggest profit-taking in Information Technology (<a href="https://www.smartkarma.com/entities/obic-co-ltd" target="_blank" data-smartkarma-citation="entities:1273:1" rel="noopener">OBIC (4684 JP)</a>, Other Commerical Products (<a href="https://www.smartkarma.com/entities/hoya-corp" target="_blank" data-smartkarma-citation="entities:8990:1" rel="noopener">Hoya Corp (7741 JP)</a>, and Commercial Services (<a href="https://www.smartkarma.com/entities/recruit-holdings-co-ltd" target="_blank" data-smartkarma-citation="entities:15070:1" rel="noopener">Recruit 6098 JP).</a> We are not contrarian enough to fall into the banking 'trap', however, the Metals Sector may offer some 'crumbs' of comfort for those in need of a deep value 'fix' (<a href="https://www.smartkarma.com/entities/nippon-steel-sumitomo-metal-corp" target="_blank" data-smartkarma-citation="entities:961:1" rel="noopener">Nippon Steel &amp; Sumitomo Metal (5401 JP)</a>) <div class="content-highlight">In the DETAIL section below, we will review Sector performance, scores and valuation in more detail, as well as Company Results &amp; Revisions and individual stock performance over the previous two weeks, as well as adding some brief comments on <a href="https://www.smartkarma.com/entities/welcia-holdings-co-ltd" target="_blank" data-smartkarma-citation="entities:20895:1" rel="noopener">Welcia (3141 JP)</a>, <a href="https://www.smartkarma.com/entities/daiseki-co-ltd" target="_blank" data-smartkarma-citation="entities:2330:1" rel="noopener">Daiseki (9793 JP), </a><a href="https://www.smartkarma.com/entities/yaskawa-electric-corp" target="_blank" data-smartkarma-citation="entities:2458:1" rel="noopener">Yaskawa Electric (6506 JP), </a><a href="https://www.smartkarma.com/entities/pola-orbis-holdings-inc" target="_blank" data-smartkarma-citation="entities:2287:1" rel="noopener">Pola Orbis (4927 JP)</a>, <a href="https://www.smartkarma.com/entities/sekisui-house-ltd" target="_blank" data-smartkarma-citation="entities:4508:1" rel="noopener">Sekisui House (1928 JP)</a>, <a href="https://www.smartkarma.com/entities/keyence-corp" target="_blank" data-smartkarma-citation="entities:3077:1" rel="noopener">Keyence (6861 JP)</a>, <a href="https://www.smartkarma.com/entities/japan-post-insurance-co-ltd" target="_blank" data-smartkarma-citation="entities:840:1" rel="noopener">Japan Post Insurance (7181 JP)</a>, and <a href="https://www.smartkarma.com/entities/obic-co-ltd" target="_blank" data-smartkarma-citation="entities:1273:1" rel="noopener">Obic (4684 JP)</a>.</div>


Source: Japan Analytics
MOVING AVERAGE BREAKOUT - Japanese equities have now risen by 5.1% since the low of 4th June and, since July 1st, the Total Market Value has exceeded the 50-Day Moving Average for the first time since 26th April. Over the last two weeks, the Total Market Value has gained 1.7% in both Yen and US dollar times. For the previous twelve months, the equity market has moved in line with the US dollar/Japanese Yen exchange rate. It remains to be seen how the 'gap' that has opened up in the last month will be closed. Any further strength in the Yen from current levels will likely see the market slip below the 50-Day Moving Average again.
 Source: Japan AnalyticsVALUE TRADED RATIO - The Value Traded Ratio (Value Traded/Total Market Value) has seen two new eighteen-month lows. If the three days around Christmas are excluded, the current apathy towards Japanese equities is the most extreme since 2012 and is confirmed by recent BAML investor surveys. In the past, such periods of inactivity (marked"▲"above)  have preceded changes in market direction, more often upwards rather than downwards and suggest the current rally has more 'legs'. 
 Source: Japan AnalyticsTORAKU INDEX - Conversely, the Toraku advance/decline index is suggesting a degree of caution having breached the 120 'overbought' line for only the third time in eighteen months. Combining this analysis with the Value Traded Ratio, there is scope for a short-term upward move akin to that of October 2018 to be followed by a sharper downward trend into the autumn.  
 Source: Japan AnalyticsVOLUME SCORE TIMELINE - The lull in market turnover is confirmed in the greener 'bias' in our Sector volume timeline. The Retail and Restaurant Sectors are hot as we are in the middle of the quarterly results announcements for February/May/August/November year-end companies. REITs remain the 'go-to' defensive Sector while the Information Technology and Internet Sectors are the 'tema-du-jour' - to mix language metaphors. The 'untouchables' are Metals, Banks, UtilitiesTransportation,  and Multi-Industry.
 Source: Japan Analytics3-MONTH SECTOR CONTRIBUTION - Over the last three months, a long Telcos/short Autos strategy would have yielded 82 basis points of performance. The Retail Sector has responded well to the results released so far led by drugstores Welcia (3141 JP) and Tsuruha (3391 JP), Fast Retailing (9983 JP), and Lawson (2651 JP). Electrical Equipment has suffered from weakness in component stocks Alps Alpine (6770 JP) (-38% over one year), Murata (6981 JP) (see Scott Foster's (Buy on Decline for the Long Term), and Taiyo Yuden (6976 JP), while SMC (6273 JP), Fanuc (6954 JP), and Komatsu (6301 JP) have weighed on the Machinery Sector.
 Source: Japan AnalyticsSECTOR SCORE MATRIX - Arranging our cap-weighted Sector Relative Price Scores and Results &amp; Revisions Scores in a four-quadrant matrix whose extremes are Contrarian Sell, Contrarian Buy, Unrequited Growth, and Ex-Growth suggest profit-taking in Information Technology (OBIC (4684 JP), Other Commerical Products (Hoya Corp (7741 JP), and Commercial Services (Recruit 6098 JP). We are not contrarian enough to fall into the banking 'trap', however, the Metals Sector may offer some 'crumbs' of comfort for those in need of a deep value 'fix' (Nippon Steel &amp; Sumitomo Metal (5401 JP)) In the DETAIL section below, we will review Sector performance, scores and valuation in more detail, as well as Company Results &amp; Revisions and individual stock performance over the previous two weeks, as well as adding some brief comments on Welcia (3141 JP), Daiseki (9793 JP), Yaskawa Electric (6506 JP), Pola Orbis (4927 JP), Sekisui House (1928 JP), Keyence (6861 JP), Japan Post Insurance (7181 JP), and Obic (4684 JP).

🇯🇵 JAPAN • Market Update - Levitating on Thin Air

Korea/Asia, Events, IPOs, Douglas Research Advisory

Douglas Kim

Korea/Asia, Events, IPOs

It has been more than 20 years that I've been covering the Korean markets and never has the political climate between Japan and South Korea been this terrible to the extent that the Japanese government has imposed the first round of significant economic sanctions on South Korea. In our view, there will likely be no major positive news next week that could dramatically result in the reconciliation between Japan and South Korea. Rather, we believe this heated political battle between Japan and South Korea appears to be just starting and that the Japanese government could impose the SECOND ROUND of economic sanctions on South Korea some time in August/September. While all these economic sanctions and restrictions of key chemical/semiconductor materials are occurring, the story of the "Joseon white porcelains" came to my mind. All in all, the current restrictions of key chemical materials from Japan such as fluorine-containing polyimide, resists, and etching gas are reminiscent of the trade restrictions on imported items such as cobalt during the Joseon dynasty hundreds of years ago.  They are also a keen reminder that in order for Korea to have a vibrant, flourishing economy, excellent political relationships with its close, powerful neighbors including China and Japan is a must.

It has been more than 20 years that I've been covering the Korean markets and never has the political climate between Japan and South Korea been this terrible to the extent that the Japanese government has imposed the first round of significant economic sanctions on South Korea. In our view, there will likely be no major positive news next week that could dramatically result in the reconciliation between Japan and South Korea. Rather, we believe this heated political battle between Japan and South Korea appears to be just starting and that the Japanese government could impose the SECOND ROUND of economic sanctions on South Korea some time in August/September. While all these economic sanctions and restrictions of key chemical/semiconductor materials are occurring, the story of the "Joseon white porcelains" came to my mind. All in all, the current restrictions of key chemical materials from Japan such as fluorine-containing polyimide, resists, and etching gas are reminiscent of the trade restrictions on imported items such as cobalt during the Joseon dynasty hundreds of years ago.  They are also a keen reminder that in order for Korea to have a vibrant, flourishing economy, excellent political relationships with its close, powerful neighbors including China and Japan is a must. 

The Political Crisis Between Japan & South Korea (Lessons from the Joseon White Porcelains & Cobalt)

Japan

FAST RETAILING CO., LTD. operates a chain of clothing stores, UNIQLO, throughout Japan and in other markets overseas including UK, China, Hong Kong, South Korea, US, France, Singapore and Russia.  The Company designs, manufactures, and retails its own line of casual clothing.

Price Gauge
52-week Range	0.00 - 0.00
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Fast Retailing (9983 JP)

🇰🇷🇯🇵 That Was The Week That Was • North Asia 22nd-27th July 2019 @Smartkarma

TW3 NORTH ASIA 22-27 JUNESmartkarma's North Asian Insight providers produced 28 new Insights this week, mostly focused on a deluge of 'events' and...

Campbell Gunn

Uniqlo’s First Female CEO Gets the Job of Managing the Cull of Stores at Home

Fast Retailing (9983 JP) appointed the first female CEO at Uniqlo last month, making Maki Akaida the only woman to lead one of Japan’s top retail...

Michael Causton

Short Selling Is Big in Japan

The Japan Exchange Group (JPX) publishes a daily report that details the short sell activity by market participants. Investors are required to...

Brian Freitas

🇯🇵 JAPAN • Market Update - Levitating on Thin Air

MOVING AVERAGE BREAKOUT - Japanese equities have now risen by 5.1% since the low of 4th June and, since July 1st, the Total Market Value has...

Campbell Gunn

The Political Crisis Between Japan & South Korea (Lessons from the Joseon White Porcelains & Cobalt)

It has been more than 20 years that I've been covering the Korean markets and never has the political climate between Japan and South Korea been...

Douglas Kim

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