Japan Specialist

Mark Chadwick

Thematic (Sector/Industry)

<ul>
<li>OVERSEAS: SPX +1.5%. Reflex US Rally post recent sell-off. Energy, Industrials, Tech lead in the Beta rally; Cons Confidence BTE; Nike +12% rpt inspires; Micron -ve after hrs</li>
<li>JAPAN: Futs flat vs Cash. USDJPY supported at ¥132  (for now); BOJ related/JGB  rates aside dominate narrative;  INBOUND tourists return;  Decarb spend to accelerate; Debt rating D/G for Rakuten</li>
<li>DAILY NUGGET: Yōkoso!  Japan. The November tourist numbers saw a doubling MoM to 934,500 visitors. However, the Chinese visitors are not here yet. It likely takes some time...</li>
</ul>


OVERSEAS: SPX +1.5%. Reflex US Rally post recent sell-off. Energy, Industrials, Tech lead in the Beta rally; Cons Confidence BTE; Nike +12% rpt inspires; Micron -ve after hrs
JAPAN: Futs flat vs Cash. USDJPY supported at ¥132  (for now); BOJ related/JGB  rates aside dominate narrative;  INBOUND tourists return;  Decarb spend to accelerate; Debt rating D/G for Rakuten
DAILY NUGGET: Yōkoso!  Japan. The November tourist numbers saw a doubling MoM to 934,500 visitors. However, the Chinese visitors are not here yet. It likely takes some time...


Good Morning Japan |Stocks (Finally) Catch a Break; Cyclicals Rebound; And..we Resume in 2023 !

IPOs and Catalysts/Events, Global Equity Research Ltd

Arun George

IPOs and Catalysts/Events

Uncompromised, Independent, Conflict-Free Research

Global Equity Research Ltd

Global Equity Research was started in 2017 by a group of experienced research professionals. It was founded on a passionate belief in the importance and the need for uncompromised, independent, conflict-free research. We aim to provide differentiated and actionable primary and bottom up fundamental research.

Event-Driven

Nippon Steel Trading Corporation / Event-Driven

<ul>
<li>
<a href="https://www.smartkarma.com/entities/nippon-steel-sumikin-bussa" target="_blank" data-smartkarma-citation="entities:13087:1" rel="noopener">Nippon Steel &amp; Sumikin Bussa (9810 JP)</a> has recommended <a href="https://www.smartkarma.com/entities/nippon-steel-corporation" target="_blank" data-smartkarma-citation="entities:961:1" rel="noopener">Nippon Steel Corporation (5401 JP)</a>’s tender at JPY9,300 per share, an 87.5% premium to the undisturbed price and an all-time high.</li>
<li>The transaction is a two-step acquisition through a cash tender offer and subsequent squeeze-out. The lower limit of the offer has been set to meet the 66.67% ownership ratio.</li>
<li>
<a href="https://www.smartkarma.com/entities/mitsui-co-ltd" target="_blank" data-smartkarma-citation="entities:20799:1" rel="noopener">Mitsui &amp; Co Ltd (8031 JP)</a> will retain its 19.93% stake and together with Nippon Steel account for 55.01% of outstanding shares. Tender starts in late-February subject to antitrust clearances.</li>
</ul>



Nippon Steel &amp; Sumikin Bussa (9810 JP) has recommended Nippon Steel Corporation (5401 JP)’s tender at JPY9,300 per share, an 87.5% premium to the undisturbed price and an all-time high.
The transaction is a two-step acquisition through a cash tender offer and subsequent squeeze-out. The lower limit of the offer has been set to meet the 66.67% ownership ratio.

Mitsui &amp; Co Ltd (8031 JP) will retain its 19.93% stake and together with Nippon Steel account for 55.01% of outstanding shares. Tender starts in late-February subject to antitrust clearances.


Nippon Steel Trading’s (9810 JP) JPY9,300 Tender Offer from Nippon Steel

Pan-Asia Catalysts/Events, Quiddity Advisors

Travis Lundy

Pan-Asia Catalysts/Events

Quiddity Advisors

<ul>
<li>
<a href="https://www.smartkarma.com/entities/nippon-steel-corporation" target="_blank" data-smartkarma-citation="entities:961:1" rel="noopener">Nippon Steel Corporation (5401 JP)</a> and <a href="https://www.smartkarma.com/entities/mitsui-co-ltd" target="_blank" data-smartkarma-citation="entities:20799:1" rel="noopener">Mitsui &amp; Co Ltd (8031 JP)</a> today announced they would buy out <a href="https://www.smartkarma.com/entities/nippon-steel-sumikin-bussa" target="_blank" data-smartkarma-citation="entities:13087:1" rel="noopener">Nippon Steel &amp; Sumikin Bussan (9810 JP)</a>, their steel-trading subsidiary. </li>
<li>The shares trade near an all-time high, but Nippon Steel is paying an 87% premium. (Interestingly, the high end of the DCF ranges suggest a 280% premium)</li>
<li>On fundamentals, this could have been higher, but given the shareholder structure, I expect it is a done deal as-is. The Tender Offer should start in February 2023.</li>
</ul>



Nippon Steel Corporation (5401 JP) and Mitsui &amp; Co Ltd (8031 JP) today announced they would buy out Nippon Steel &amp; Sumikin Bussan (9810 JP), their steel-trading subsidiary. 
The shares trade near an all-time high, but Nippon Steel is paying an 87% premium. (Interestingly, the high end of the DCF ranges suggest a 280% premium)
On fundamentals, this could have been higher, but given the shareholder structure, I expect it is a done deal as-is. The Tender Offer should start in February 2023.


Nippon Steel & Mitsui & Co to Buy Out Nippon Steel Trading (9810) At 87% Premium

<ul>
<li>As designed, the JPX-Nikkei400 Index is something of a disaster. It aims to be slightly 'smart' vs other cap-weighted indices like TOPIX, but tracking error vs TOPIX is de minimus.</li>
<li>This year, in week 1, the ADD vs DELETE performance is positive. If we sector-hedge the ADDs vs DELETEs, it's doing even better.</li>
<li>This is probably due to relatively low pre-positioning, and cares. Momentum suggests one could be long ADDs vs DELETEs. And there is the perennial trade to watch out for.</li>
</ul>


As designed, the JPX-Nikkei400 Index is something of a disaster. It aims to be slightly 'smart' vs other cap-weighted indices like TOPIX, but tracking error vs TOPIX is de minimus.
This year, in week 1, the ADD vs DELETE performance is positive. If we sector-hedge the ADDs vs DELETEs, it's doing even better.
This is probably due to relatively low pre-positioning, and cares. Momentum suggests one could be long ADDs vs DELETEs. And there is the perennial trade to watch out for.


2022 JPX Nikkei 400 Rebal Update - Going the Right Way

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

Brian Freitas

Pan-Asia Index Rebalances/ Events/ Delta One

Periscope Analytics

Periscope Analytics focuses on event-driven trades across Asia Pacific and provides comprehensive, timely and systematic coverage of index changes to major Asia Pacific indices in a structured manner.

The analysis includes forecasted inclusions and exclusions to all major Asian indices that have significant amount of tracking assets, including estimates of passive buy/sell flow on the stocks. The service also provides commentary and impact of market consultations, ground rule changes, and other events (IPOs, spin-offs, M&A) that could lead to index changes and passive flow.

Periscope Analytics works with multi-strategy hedge funds, proprietary trading firms, stat arb trading groups and long-only investors that invest and trade in the Asia Pacific region with the data being used to trade index rebalances, avoid pre-positioning and passive flow, and to time entry into and exit from stocks.

Event-Driven Trades Across Asia Pacific

<ul>
<li>There are 36 adds and 34 deletes for the JPX Nikkei 400 Index to bring the number of index constituents back to 400. Some of the changes are interesting.</li>
<li>Based on the adds, deletes and capping changes, we estimate one way turnover of 4.75% and a two-way trade of JPY 444.45bn (US$3.3bn).</li>
<li>
<a href="https://www.smartkarma.com/entities/oriental-land-co-ltd" target="_blank" data-smartkarma-citation="entities:13517:1" rel="noopener">Oriental Land (4661 JP)</a> is a delete from the JPX Nikkei 400 Index but a high probability inclusion to the <a href="https://www.smartkarma.com/entities/nikkei-225" target="_blank" data-smartkarma-citation="entities:22909:1" rel="noopener">Nikkei 225 (NKY INDEX)</a> at the September rebalance.</li>
</ul>


There are 36 adds and 34 deletes for the JPX Nikkei 400 Index to bring the number of index constituents back to 400. Some of the changes are interesting.
Based on the adds, deletes and capping changes, we estimate one way turnover of 4.75% and a two-way trade of JPY 444.45bn (US$3.3bn).

Oriental Land (4661 JP) is a delete from the JPX Nikkei 400 Index but a high probability inclusion to the Nikkei 225 (NKY INDEX) at the September rebalance.


JPX Nikkei 400 Index Rebalance: Some Biggish Impact Stocks

Japan

Nippon Steel Corp is an integrated steel maker. The Company produces various types of steel products used for industrial machinery & equipment and exports them worldwide.  Nippon Steel provides plant construction and urban development and also develops new businesses such as chemicals, ceramics, electronic equipment and information & communication systems.

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Nippon Steel Corporation (5401 JP)

Good Morning Japan |Stocks (Finally) Catch a Break; Cyclicals Rebound; And..we Resume in 2023 !

JAPAN: Futs flat vs Cash. USDJPY supported at ¥132; INBOUND tourists return; Decarb spend to accelerate - we see this as the BIG THEME FOR 2023...

Mark Chadwick

Nippon Steel Trading’s (9810 JP) JPY9,300 Tender Offer from Nippon Steel

The tender offer is a sensible move for Nippon Steel. The tender offer price represents an all-time share price. At the last close, the gross...

Arun George

Nippon Steel & Mitsui & Co to Buy Out Nippon Steel Trading (9810) At 87% Premium

Nippon Steel and sometimes partner MItsui Bussan are buying out Nippon Steel Trading (9810). They have 55%, 64% with friends. Need 66.7%. 87%...

Travis Lundy

2022 JPX Nikkei 400 Rebal Update - Going the Right Way

JPX Nikkei 400 rebalance is going the right way in the 6 trading days so far, and it wasn't done on Day1 (which was lacklustre). It may be under...

Travis Lundy

JPX Nikkei 400 Index Rebalance: Some Biggish Impact Stocks

There are 36 adds & 34 deletes for the JPX Nikkei 400 Index at the August rebalance leading to an estimated one way turnover of 4.75% and a two-way...

Brian Freitas

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