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

Brian Freitas

Pan-Asia Index Rebalances/ Events/ Delta One

Quantitative Analysis

<div><p>The Asia Short Interest weekly looks at moves in market wide short interest and highlights movements in stock specific short interest across Hong Kong, Japan, Korea and Taiwan using the last available data published by the relevant authorities.</p></div><div><p>Hong Kong saw shorts rise on <a href="https://www.smartkarma.com/entities/ping-an-insurance-grp-co-of-china-ltd" target="_blank" data-smartkarma-citation="entities:12880:1" rel="noopener">Ping An Insurance (H) (2318 HK)</a>, <a href="https://www.smartkarma.com/entities/alibaba-group" target="_blank" data-smartkarma-citation="entities:28434:1" rel="noopener">Alibaba Group (9988 HK)</a>, <a href="https://www.smartkarma.com/entities/tencent-holdings-ltd" target="_blank" data-smartkarma-citation="entities:26:1" rel="noopener">Tencent Holdings (700 HK)</a> and <a href="https://www.smartkarma.com/entities/china-petroleum-chemical-h" target="_blank" data-smartkarma-citation="entities:369:1" rel="noopener">China Petroleum &amp; Chemical (386 HK)</a> while there was short covering on <a href="https://www.smartkarma.com/entities/meituan-dianping" target="_blank" data-smartkarma-citation="entities:26970:1" rel="noopener">Meituan (3690 HK)</a>, <a href="https://www.smartkarma.com/entities/great-wall-motor-co-ltd-cb302af9-398c-4d2d-ba39-023e43287eef" target="_blank" data-smartkarma-citation="entities:128:1" rel="noopener">Great Wall Motor (2333 HK)</a>, <a href="https://www.smartkarma.com/entities/kingdee-international-sftwr" target="_blank" data-smartkarma-citation="entities:37:1" rel="noopener">Kingdee International Software (268 HK)</a> and <a href="https://www.smartkarma.com/entities/anta-sports-products-ltd" target="_blank" data-smartkarma-citation="entities:10261:1" rel="noopener">Anta Sports Products (2020 HK)</a>. Shorts increased in Financials, Communication Services, Health Care and Energy, and decreased on Information Technology names.</p></div><div><p>In Japan, stocks that saw the most shorts were <a href="https://www.smartkarma.com/entities/recruit-holdings-co-ltd" target="_blank" data-smartkarma-citation="entities:15070:1" rel="noopener">Recruit Holdings (6098 JP)</a>, <a href="https://www.smartkarma.com/entities/tokyo-electron-ltd" target="_blank" data-smartkarma-citation="entities:280:1" rel="noopener">Tokyo Electron (8035 JP)</a>, <a href="https://www.smartkarma.com/entities/sharp-corp" target="_blank" data-smartkarma-citation="entities:391:1" rel="noopener">Sharp Corp (6753 JP)</a> and <a href="https://www.smartkarma.com/entities/capcom-co-ltd" target="_blank" data-smartkarma-citation="entities:1459:1" rel="noopener">Capcom Co Ltd (9697 JP)</a> while shorts decreased on <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/kawasaki-heavy-industries" target="_blank" data-smartkarma-citation="entities:8790:1" rel="noopener">Kawasaki Heavy Industries (7012 JP)</a>, <a href="https://www.smartkarma.com/entities/canon-inc" target="_blank" data-smartkarma-citation="entities:1:1" rel="noopener">Canon Inc (7751 JP)</a> and <a href="https://www.smartkarma.com/entities/cyberagent-inc" target="_blank" data-smartkarma-citation="entities:8197:1" rel="noopener">CyberAgent Inc (4751 JP)</a>. Sectorally, shorts increased on Information Technology names and decreased in the Consumer Discretionary, Materials, Health Care and Financials sectors.</p></div><div><p>In Korea, there was large short covering on <a href="https://www.smartkarma.com/entities/celltrion-inc" target="_blank" data-smartkarma-citation="entities:991:1" rel="noopener">Celltrion Inc (068270 KS)</a>, <a href="https://www.smartkarma.com/entities/samsung-electronics-co-ltd" target="_blank" data-smartkarma-citation="entities:191:1" rel="noopener">Samsung Electronics (005930 KS)</a>, <a href="https://www.smartkarma.com/entities/samsung-sdi-co-ltd" target="_blank" data-smartkarma-citation="entities:503:1" rel="noopener">Samsung SDI (006400 KS)</a> and <a href="https://www.smartkarma.com/entities/samsung-electro-mechanics-co" target="_blank" data-smartkarma-citation="entities:539:1" rel="noopener">Samsung Electro Mechanics Co, Ltd. (009150 KS)</a>. </p></div><div><p>Stocks in Taiwan that saw the highest increase in shorts were <a href="https://www.smartkarma.com/entities/au-optronics-corp" target="_blank" data-smartkarma-citation="entities:6704:1" rel="noopener">Au Optronics (2409 TT)</a>, <a href="https://www.smartkarma.com/entities/delta-electronics-inc" target="_blank" data-smartkarma-citation="entities:12688:1" rel="noopener">Delta Electronics (2308 TT)</a>, <a href="https://www.smartkarma.com/entities/largan-precision-co-ltd" target="_blank" data-smartkarma-citation="entities:9126:1" rel="noopener">Largan Precision (3008 TT)</a> and <a href="https://www.smartkarma.com/entities/nanya-technology-corp" target="_blank" data-smartkarma-citation="entities:3269:1" rel="noopener">Nanya Technology (2408 TT)</a> while shorts were covered on <a href="https://www.smartkarma.com/entities/taiwan-semiconductor-manufacturing-company" target="_blank" data-smartkarma-citation="entities:11230:1" rel="noopener">TSMC (2330 TT)</a>, <a href="https://www.smartkarma.com/entities/taiwan-cement" target="_blank" data-smartkarma-citation="entities:19736:1" rel="noopener">Taiwan Cement (1101 TT)</a>, <a href="https://www.smartkarma.com/entities/mediatek-inc" target="_blank" data-smartkarma-citation="entities:772:1" rel="noopener">Mediatek Inc (2454 TT)</a> and <a href="https://www.smartkarma.com/entities/macronix-international" target="_blank" data-smartkarma-citation="entities:3247:1" rel="noopener">Macronix International (2337 TT)</a>. </p></div>

The Asia Short Interest weekly looks at moves in market wide short interest and highlights movements in stock specific short interest across Hong Kong, Japan, Korea and Taiwan using the last available data published by the relevant authorities.Hong Kong saw shorts rise on Ping An Insurance (H) (2318 HK), Alibaba Group (9988 HK), Tencent Holdings (700 HK) and China Petroleum &amp; Chemical (386 HK) while there was short covering on Meituan (3690 HK), Great Wall Motor (2333 HK), Kingdee International Software (268 HK) and Anta Sports Products (2020 HK). Shorts increased in Financials, Communication Services, Health Care and Energy, and decreased on Information Technology names.In Japan, stocks that saw the most shorts were Recruit Holdings (6098 JP), Tokyo Electron (8035 JP), Sharp Corp (6753 JP) and Capcom Co Ltd (9697 JP) while shorts decreased on Fast Retailing (9983 JP), Kawasaki Heavy Industries (7012 JP), Canon Inc (7751 JP) and CyberAgent Inc (4751 JP). Sectorally, shorts increased on Information Technology names and decreased in the Consumer Discretionary, Materials, Health Care and Financials sectors.In Korea, there was large short covering on Celltrion Inc (068270 KS), Samsung Electronics (005930 KS), Samsung SDI (006400 KS) and Samsung Electro Mechanics Co, Ltd. (009150 KS). Stocks in Taiwan that saw the highest increase in shorts were Au Optronics (2409 TT), Delta Electronics (2308 TT), Largan Precision (3008 TT) and Nanya Technology (2408 TT) while shorts were covered on TSMC (2330 TT), Taiwan Cement (1101 TT), Mediatek Inc (2454 TT) and Macronix International (2337 TT). 

Asia Short Interest: Sinopec, Kingdee, Anta, Recruit, Capcom, Sharp, Celltrion, Samsung, Delta, TSMC

Independent Asian Credit Research, Bondcritic

Warut Promboon

Independent Asian Credit Research

Asian Fixed Income/Frontier Market Research

Bondcritic

Bondcritic, established in 2009, is designed to be an independent credit research voice that helps investors gain insights and unbiased analyses on Asian fixed income market. Our mission is to discover deep-value Asian high-yield and distressed bonds with a bottom-up approach, together with the help of our proprietary ESG (Environmental, Social Development, and Governance) model. At the same time, we focus on bringing investment cases of unrated and unloved issuers to the general public.

Thematic (Sector/Industry)

<p style="text-align: justify;">In this Smartkarma Original, we seek to study how diversity and incentives influence stock performance and profitability. We tallied diversity and incentive data related to the board of directors, management, and employees across major economies in Asia and picked top 10 companies of each country in terms of market capitalization. We chose to exclude major companies listed in exchanges of other economies such as Tencent and Alibaba to limit our sample size.</p>
<p style="text-align: justify;">Then we devised diversity and incentive scores to assign to those companies and compare those scores against a 5-year trend of their return on shareholders’ equity (ROE) ratios and 1-year stock performance from 1-July-19 to 30-June-20 over its corresponding exchange indices.</p>
<p style="text-align: justify;">The report covers diversity vs. incentives in Asia, diversity score vs. 1-year stock performance and ROE trend, incentives vs. 1-year stock performance and ROE trend, diversity + incentives scores vs. 1-year stock performance and ROE trend, companies with top and bottom diversity + incentive scores, countries with top and bottom average diversity + incentive scores, and incentive score vs. staffing cost trend. </p>
<p style="text-align: justify;">The results show that companies with high diversity scores do perform well. A high diversity score also has a positive impact on the ROE trend, based on our regression analysis at 95% confidence level. We found that employee incentives are not significant as staff diversity but they can still have an influence on company performances at a lower 90% confidence level.</p>
<p style="text-align: justify;">We note that this study is at the preliminary stage and stock performance is a function of many factors, not only the diversity scores that we concluded. Needless to say, our diversity and incentive scores also reflect the level of disclosures by selected companies, not necessarily the actual practice within each company. Our diversity and incentive scores are also not a credit rating or ranking with peers and, hence, do not reflect default probability of selected companies.</p>
<p style="text-align: justify;">We caution that in Asia, many diversity trends in the West may not apply. The fact that many Asian business communities may remain less sensitive to equal opportunities for females, disabled persons, or LGBTQ communities could make returns of Asian companies less correlated to diversity than in the West. Likewise, additional incentives in some countries in Asia may not be necessary as employees’ strong performance (i.e. in Japan) is a norm, according to the prevalent work culture.</p>
<p style="text-align: justify;">Bondcritic is developing a scoring model, which includes environment, social development, and corporate governance; the last of which cover diversity and incentives. This report is the first of the series to uncover shenanigans in the Asian corporate sector.</p>

In this Smartkarma Original, we seek to study how diversity and incentives influence stock performance and profitability. We tallied diversity and incentive data related to the board of directors, management, and employees across major economies in Asia and picked top 10 companies of each country in terms of market capitalization. We chose to exclude major companies listed in exchanges of other economies such as Tencent and Alibaba to limit our sample size.
Then we devised diversity and incentive scores to assign to those companies and compare those scores against a 5-year trend of their return on shareholders’ equity (ROE) ratios and 1-year stock performance from 1-July-19 to 30-June-20 over its corresponding exchange indices.
The report covers diversity vs. incentives in Asia, diversity score vs. 1-year stock performance and ROE trend, incentives vs. 1-year stock performance and ROE trend, diversity + incentives scores vs. 1-year stock performance and ROE trend, companies with top and bottom diversity + incentive scores, countries with top and bottom average diversity + incentive scores, and incentive score vs. staffing cost trend. 
The results show that companies with high diversity scores do perform well. A high diversity score also has a positive impact on the ROE trend, based on our regression analysis at 95% confidence level. We found that employee incentives are not significant as staff diversity but they can still have an influence on company performances at a lower 90% confidence level.
We note that this study is at the preliminary stage and stock performance is a function of many factors, not only the diversity scores that we concluded. Needless to say, our diversity and incentive scores also reflect the level of disclosures by selected companies, not necessarily the actual practice within each company. Our diversity and incentive scores are also not a credit rating or ranking with peers and, hence, do not reflect default probability of selected companies.
We caution that in Asia, many diversity trends in the West may not apply. The fact that many Asian business communities may remain less sensitive to equal opportunities for females, disabled persons, or LGBTQ communities could make returns of Asian companies less correlated to diversity than in the West. Likewise, additional incentives in some countries in Asia may not be necessary as employees’ strong performance (i.e. in Japan) is a norm, according to the prevalent work culture.
Bondcritic is developing a scoring model, which includes environment, social development, and corporate governance; the last of which cover diversity and incentives. This report is the first of the series to uncover shenanigans in the Asian corporate sector.

Asian Governance: Diversity & Incentives Through the Cultural Lens

Technical Analyst, Vermilion Research

Joe Jasper

Technical Analyst

Technical and Quantitative Research

Vermilion Research

Vermilion’s objective is to deliver timely, actionable, and unique technical research to professional investors through the application of our various technical indicators.

Our research strategists seek to highlight securities which we believe are at major inflection points, based on our various technical and quantitative indicators, and offer asymmetric risk/return profiles. Our unique research methodology, centered on relative strength, enables our strategists to deliver superior investment recommendations.

Our process begins by organizing the universe of actively traded stocks into discrete sectors, then into industry groups. We then apply our technical and quantitative tools to identify developing price trends. Once attractive trends are identified within a selected sector or group, we screen for individual stocks which we believe offer the best risk/reward profile. We provide a historical perspective that often reveals, through our long-term charts, how price patterns often repeat themselves over time.

Technical Analysis

MSCI Emerging Markets Index / Technical Analysis

<p>With RS uptrends intact we continue to recommend Sector overweights to MSCI EM Technology, Consumer Discretionary, Health Care, and Communications. Materials remains an attractive cyclical value Sector as both price and RS show signs of bottoming -- add exposure. In this report we offer a number of attractive set ups with the EM universe across sectors.  </p>

With RS uptrends intact we continue to recommend Sector overweights to MSCI EM Technology, Consumer Discretionary, Health Care, and Communications. Materials remains an attractive cyclical value Sector as both price and RS show signs of bottoming -- add exposure. In this report we offer a number of attractive set ups with the EM universe across sectors.  

Global Equity Chart Book: Stick With EM Over EAFE

<div><p>Total short notional in Taiwan stocks is TWD 258,166 mm (~US$8.48 bn) as of 1 November.</p></div><div><p>Over the week, the largest short positions were put on in <a href="https://www.smartkarma.com/entities/merry-electronics-co-ltd" target="_blank" rel="noopener" data-smartkarma-citation="entities:15538:1">Merry Electronics (2439 TT)</a>, <a href="https://www.smartkarma.com/entities/macronix-international" target="_blank" rel="noopener" data-smartkarma-citation="entities:3247:1">Macronix International (2337 TT)</a>, <a href="https://www.smartkarma.com/entities/concraft-holding-co-ltd" target="_blank" rel="noopener" data-smartkarma-citation="entities:19853:1">Concraft Holding (4943 TT)</a> and <a href="https://www.smartkarma.com/entities/delta-electronics-inc" target="_blank" rel="noopener" data-smartkarma-citation="entities:12688:1">Delta Electronics (2308 TT)</a> and shorts were covered in <a href="https://www.smartkarma.com/entities/taiwan-surface-mounting-tech-corp" target="_blank" rel="noopener" data-smartkarma-citation="entities:1214:1">Taiwan Surface Mounting Tech Corp. (6278 TT)</a>, <a href="https://www.smartkarma.com/entities/chunghwa-telecom-co-ltd" target="_blank" rel="noopener" data-smartkarma-citation="entities:9181:1">Chunghwa Telecom (2412 TT)</a>, <a href="https://www.smartkarma.com/entities/au-optronics-corp" target="_blank" rel="noopener" data-smartkarma-citation="entities:6704:1">Au Optronics (2409 TT)</a> and <a href="https://www.smartkarma.com/entities/largan-precision-co-ltd" target="_blank" rel="noopener" data-smartkarma-citation="entities:9126:1">Largan Precision (3008 TT)</a>.   <a href="https://www.smartkarma.com/entities/yageo-corporation" target="_blank" rel="noopener" data-smartkarma-citation="entities:13212:1"></a></p></div><div><p>The largest short positions as a percentage of free float are <a href="https://www.smartkarma.com/entities/young-optics-inc" target="_blank" rel="noopener" data-smartkarma-citation="entities:7295:1">Young Optics (3504 TT)</a>, <a href="https://www.smartkarma.com/entities/precision-silicon-corp" target="_blank" rel="noopener" data-smartkarma-citation="entities:18158:1">Precision Silicon (3016 TT)</a>, <a href="https://www.smartkarma.com/entities/walsin-technology-corp" target="_blank" rel="noopener" data-smartkarma-citation="entities:11084:1">Walsin Technology (2492 TT)</a> and <a href="https://www.smartkarma.com/entities/yageo-corporation" target="_blank" rel="noopener" data-smartkarma-citation="entities:13212:1">Yageo Corporation (2327 TT)</a> while the large cap stocks with the highest days to cover are <a href="https://www.smartkarma.com/entities/china-synthetic-rubber" target="_blank" rel="noopener" data-smartkarma-citation="entities:2403:1">China Synthetic Rubber (2104 TT)</a>, <a href="https://www.smartkarma.com/entities/au-optronics-corp" target="_blank" rel="noopener" data-smartkarma-citation="entities:6704:1">Au Optronics (2409 TT)</a>, <a href="https://www.smartkarma.com/entities/yulon-motor-company" target="_blank" rel="noopener" data-smartkarma-citation="entities:18249:1">Yulon Motor Company (2201 TT)</a> and <a href="https://www.smartkarma.com/entities/tatung-co-ltd" target="_blank" rel="noopener" data-smartkarma-citation="entities:3458:1">Tatung Co Ltd (2371 TT)</a>. </p></div><div><p>We look at short interest evolution in names that have seen the largest short build up and covering for the month of October.</p></div>

Total short notional in Taiwan stocks is TWD 258,166 mm (~US$8.48 bn) as of 1 November.Over the week, the largest short positions were put on in Merry Electronics (2439 TT), Macronix International (2337 TT), Concraft Holding (4943 TT) and Delta Electronics (2308 TT) and shorts were covered in Taiwan Surface Mounting Tech Corp. (6278 TT), Chunghwa Telecom (2412 TT), Au Optronics (2409 TT) and Largan Precision (3008 TT).   The largest short positions as a percentage of free float are Young Optics (3504 TT), Precision Silicon (3016 TT), Walsin Technology (2492 TT) and Yageo Corporation (2327 TT) while the large cap stocks with the highest days to cover are China Synthetic Rubber (2104 TT), Au Optronics (2409 TT), Yulon Motor Company (2201 TT) and Tatung Co Ltd (2371 TT). We look at short interest evolution in names that have seen the largest short build up and covering for the month of October.

Shanghai Stock Exchange Composite Index / Technical Analysis

<p>The MSCI EM index continues to develop positively from a price perspective and we expect higher prices ahead. China remains leadership -- overweight. At the same time we recommend selectivity in new purchases considering many Chinese equities are extended. In this report we highlight a number of attractive stocks from Chines markets as well as opportunities within <strong>Greece, South Africa, India, </strong>and <strong>Taiwan</strong>.</p>

The MSCI EM index continues to develop positively from a price perspective and we expect higher prices ahead. China remains leadership -- overweight. At the same time we recommend selectivity in new purchases considering many Chinese equities are extended. In this report we highlight a number of attractive stocks from Chines markets as well as opportunities within Greece, South Africa, India, and Taiwan.

EM Equity Strategy: Remain Overweight China

Taiwan

Delta Electronics Inc. manufactures power supplies and video display products. The Company's products include switching power supplies, telecom power systems, uninterrupted power supply (UPS), variable speed alternating current (AC) monitor drives, high resolution color monitors, and projectors.  Delta also manufactures magnetic and networking components.

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Delta Electronics (2308 TT)

Asia Short Interest: Sinopec, Kingdee, Anta, Recruit, Capcom, Sharp, Celltrion, Samsung, Delta, TSMC

The Short Interest report looks at large weekly movements across HK, Japan, Korea and Taiwan. Ping An saw a huge increase in shorts while TSMC saw...

Brian Freitas

Asian Governance: Diversity & Incentives Through the Cultural Lens

In this Smartkarma Original, we seek to study how diversity and incentives influence stock performance and profitability. We tallied diversity and...

Bondcritic

Global Equity Chart Book: Stick With EM Over EAFE

With RS uptrends intact we continue to recommend Sector overweights to MSCI EM Technology, Consumer Discretionary, Health Care, and Communications....

Vermilion Research

Taiwan Shorts - October Recap

Total short notional in Taiwan stocks is TWD 258,166 mm (~US$8.48 bn) as of 1 November.Over the week, the largest short positions were put on in...

Brian Freitas

EM Equity Strategy: Remain Overweight China

The MSCI EM index continues to develop positively from a price perspective and we expect higher prices ahead. China remains leadership --...

Vermilion Research

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