'Quantamental' Japan Specialist, LightStream Research

Campbell Gunn

'Quantamental' Japan Specialist

Long-Short Analysis on Japan, Asia and the World

LightStream Research

LightStream conducts quantitatively rigorous and data-driven analysis with a focus on Japan and Asia.

We consistently cover the Tech, Consumer and Industrial sectors, and provide ECM and Events coverage more broadly.

We supplement traditional qualitative insights from company relationships with a robust quantitative foundation that examines as much historical data as is available.
We further refine the accuracy of our insights and calls through the use of alternative data to flesh out current trends, and through a valuation framework that emphasises non-superficial peer group selection and a proper attempt to understand the metrics and changes that have driven security valuations in the past.

Thematic (Sector/Industry)

<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/128/454/original/2020-04-18_16-16-49.png?1587194226" class="editor-image img-responsive" data-smartkarma-image-id="128454"></figure><div class="content-caption">Source • Japan Analytics</div><p><strong>MARKING TIME</strong> - Japanse equities were becalmed last week, rising by 0.84%, while the Yen traded at 107 all week. The Bank of Japan bought ETFs on Wednesday and Thursday despite the relative calm and are on a path for April to equal the total purchases made in March. </p><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/128/455/original/2020-04-18_17-43-44.png?1587199447" class="editor-image img-responsive" data-smartkarma-image-id="128455"></figure><div class="content-caption">Source • Japan Analytics</div><p><strong>MARKING MULTIPLES</strong> - As we have been covering in our daily Results &amp; Revisions updates, forward earnings continue to decline gradually. As previously noted, the market multiple will rise over the next month as full-year forecasts for FY2021 are announced to at least the early 2020 peak of 17.6 times. This adjustment process will be complicated by a lack of initial forecasts from many leading companies and by a delay in the publication of annual <em>yuho</em> audited financial statements until the late summer. 'Robust' analysis will be at a premium.</p><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/128/651/original/File%202020-04-20%204%2023%2024.jpeg?1587324271" class="editor-image img-responsive" data-smartkarma-image-id="128651"></figure><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/128/652/original/File%202020-04-20%204%2024%2019.jpeg?1587324282" class="editor-image img-responsive" data-smartkarma-image-id="128652"></figure><p></p><div class="content-caption">Source • ourworldindata.org</div><p><strong>COVID CASE COUNT</strong> - Japan's COVID-19 daily case-count has trended down this week compared to the weel before and is now on a par with Sweden and Singapore. Daily fatalities are averaging double figures as this lagging statistics reflects the higher case count of two weeks ago and are still within the East Asian 'range' of 0-10 a day. New case counts of below 100 and a declining trend, as is the case in South Korea, Denmark and Austria will be required by the end of Golden Week on May 6th for Japan to consider any relaxation of its now nationwide 'state of emergency'. </p><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/128/558/original/File%202020-04-19%2016%2028%2027.jpeg?1587281926" class="editor-image img-responsive" data-smartkarma-image-id="128558"></figure><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/128/559/original/File%202020-04-19%2016%2023%2014.jpeg?1587281952" class="editor-image img-responsive" data-smartkarma-image-id="128559"></figure><div class="content-caption">Source • ourworldindata.org</div><p><strong>JAPAN'S TESTING VACUUM</strong> - We have noted the lack of testing in Japan in an earlier <a href="https://www.smartkarma.com/insights/japan-market-update-hit-the-boj-bid-and-wait-for-the-absolute-value-opportunity" target="_blank" data-smartkarma-citation="insights:37670" rel="noopener">Insight</a> and the two charts above from Oxford's Global Change Data Lab highlights Japan's outlier status in this regard and the implications for confirmed case counts and confirmed deaths. This deficiency has led many data scientists to study excess mortality rates. At present, there is insufficient data from the Health Ministry in Japan to make any valid comparisons. Based on other countries, Japan's excess mortality will likely price to be slightly higher for the over 65s and lower for everyone else. In any case, a massive testing capability will form a key component of any viable exit strategy.     </p><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/128/479/original/File%202020-04-19%206%2024%2053.jpeg?1587245112" class="editor-image img-responsive" data-smartkarma-image-id="128479"></figure><div class="content-caption">Source • stopcovid19.jp</div><p><strong>OVERSHOOT</strong> - Unfortunately for patients and the government, hospitals are now full in many prefectures. Central Tokyo hospitals are turning away patients requiring ambulances to take patients to outlying parts of the prefecture - although this situation is not unusual in normal times. Despite ample time to prepare, the government has failed to provide for the 'overshoot' that they had been warning the public it was necessary to avoid. Japan also has a lower ratio of intensive care beds, (5) per 100,000 people, than many other developed countries. The previous policy of hospitalising every case, however mild, has been reversed and local governments have now requisitioned 210,000 hotel rooms to house those not in need of urgent medical intervention. While Japan's COVID-19 strategy has, so far, followed the less economically-damaging Swedish model (see below), a failure to address the hospital overshoot risks the country being forced to follow the UK's 'u-turn' into total lockdown from which exit strategies are much harder. </p><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/128/650/original/2020-04-20_04-02-00.png?1587322973" class="editor-image img-responsive" data-smartkarma-image-id="128650"></figure><div class="content-caption">Source • Tokyo Metropolitan Government</div><p><strong>PEAKING OUT?</strong> On Sunday, Tokyo only 107 new cases, the lowest Sunday total for three weeks and the first decline. Tokyo now has over 3,000 cases out of a population of almost 14 million. The rate of doubling is now decelerating from one week to two weeks. Meanwhile, transit through major railway stations has declined by 70-80% across Japan. A lowering of new cases next week will be crucial to keep the hospitals from overflowing and the Prime Minister's reputation from falling further.</p><p><strong>FALLOUT</strong> - PM Abe's political capital is another casualty of this disease. It has emerged that his coalition partner the lay-Buddhist Komeito party threatened to walk out if the cash-for-all policy was not implemented requiring Abe to amend a previously-agreed budget bill much to the fury of the Ministry of Finance. The latter was able to require an application process as a means of limiting the amounts dispersed. However, in a bow to the changing circumstance, this process can be conducted online without, it seems, the need for in-person <em>hanko</em> certification. An additional complication is that Abe has 'fallen out' with his main bureaucratic 'fixer' and the main conduit with Komeito, Chief Cabinet Secretary Suga. Abe's poll ratings will probably never recover, and only his long-cherished desire to open the Tokyo Olympics in July 20121 will keep him in office. As will be true in many countries, the COVID-19 policy post mortems will be brutal and fatal for many previously Teflon-like political careers.</p><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/128/486/original/File%202020-04-18%2013%2054%2022.jpeg?1587246944" class="editor-image img-responsive" data-smartkarma-image-id="128486"></figure><div class="content-caption">Source • Agoop</div><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/128/488/original/File%202020-04-18%2013%2053%2001.jpeg?1587247186" class="editor-image img-responsive" data-smartkarma-image-id="128488"></figure><div class="content-caption">Source • @shinagawajp &gt; Blue bars = COVID-19 cases by Tokyo Ward   Orange Line = Concentration of people at 11 pm</div><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/128/490/original/File%202020-04-18%2014%2000%2004.jpeg?1587247628" class="editor-image img-responsive" data-smartkarma-image-id="128490"></figure><div class="content-caption">Source • @shinagawajp &gt; Blue bars = COVID-19 cases by Tokyo Ward  Red Line = Population earning more than ¥15m a year</div><p><strong>HOTSPOTS &amp; FAT CATS</strong> - Some support for the government's policy of shutting down Tokyo's nightlife comes from data which correlates case count per Tokyo ward and population clusters in each area at 11 pm.  The correlation is much higher than both population levels and public transport transit through each ward. The second highest correlation was with income levels, suggesting that Tokyo' rich have a greater tendency to frequent bars, restaurants and other forms of evening entertainment, while no doubt considering themselves immune. This correlation has been anecdotally confirmed by the growing number of figures from the media and entertainment world who have contracted the disease and bears out the Tokyo Metropolitan Government's focus on avoiding the 3 'C's - <strong>C</strong>ongregations <strong>C</strong>onversing in <strong>C</strong>onfined spaces. The plug has been pulled on Tokyo's '<em>mizushobai'</em> or 'water trade'.</p><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/128/663/original/File%202020-04-20%205%2020%2010.jpeg?1587327650" class="editor-image img-responsive" data-smartkarma-image-id="128663"></figure><div class="content-caption">Source • Johns Hopkins CSSE</div><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/128/478/original/2020-04-19_06-16-22.png?1587244624" class="editor-image img-responsive" data-smartkarma-image-id="128478"></figure><div class="content-caption">Source • LockdownTV</div><p><strong>PROF GIESECKE &amp; THE SWEDISH MODEL</strong> - Lastly, this <a href="https://youtu.be/bfN2JWifLCY" target="_blank" rel="noopener">video</a> of an interview with retired Swedish epidemiologist, Professor Johan Giesecke, provides an update on the policy options that governments have faced in their responses to COVID-19, the background to Sweden's policy and the difficulties of exiting from lockdown strategies. A summary of his talk is as follows:-</p><blockquote>
<p>Lockdown policies are not evidence-based</p>
<p>The correct policy is to protect the old and the frail only - this will eventually lead to herd immunity as a by-product - the initial UK response, which was similar to Sweden's was better  - before they made a 180 degree U-turn</p>
<p>The UK's Imperial College paper was not very good and he has never seen an unpublished paper have so much policy impact - the paper was  too pessimistic and any such models are a dubious basis for public policy</p>
<p>The flattening of the curve is due to the most vulnerable dying first as much as the lockdown policy</p>
<p>The outcomes will eventually be similar for all countries regardless of policy pursued</p>
<p>Covid-19 is a mild disease similar to the flu, and it was the novelty of the disease that scared people - the fatality rate of Covid-19 is the region of 0.1%</p>
<p>At least 50% of the population will be shown to have already had the disease when mass antibody testing becomes available - achieving 'herd immunity'</p>
</blockquote><p>In the <strong>DETAIL </strong>below, we shall explore some of the emerging themes for the post-COVID-19 world, review the results, revisions and initial forecast announcements made on Friday and, finally, look at our lists the Moving Average 'Outliers'.  The positive/neutral/negative balance for Friday's three results announcements was 1:0:2. For the 20 revisions/forecasts, the split was 7:1:12 - although two of the positive outcomes were securities brokers making initial 'forecasts' of a year-on-year return to profitability after the full-year results have been finalised. Peer Groups revising down included <strong>Advertising Services</strong>, <strong>Apparel &amp; Footwear</strong>, <strong>Retail-Apparel &amp; Footwear</strong>, <strong>Hotels &amp; Resorts</strong>, <strong>Employment &amp; Staffing</strong>, and<strong> Restaurants</strong>. Upward revisions were seen in<strong> Retail-Food &amp; Drink</strong>, <strong>Personal Products</strong>, and<strong> Public Relations</strong>.</p>

Source • Japan AnalyticsMARKING TIME - Japanse equities were becalmed last week, rising by 0.84%, while the Yen traded at 107 all week. The Bank of Japan bought ETFs on Wednesday and Thursday despite the relative calm and are on a path for April to equal the total purchases made in March. Source • Japan AnalyticsMARKING MULTIPLES - As we have been covering in our daily Results &amp; Revisions updates, forward earnings continue to decline gradually. As previously noted, the market multiple will rise over the next month as full-year forecasts for FY2021 are announced to at least the early 2020 peak of 17.6 times. This adjustment process will be complicated by a lack of initial forecasts from many leading companies and by a delay in the publication of annual yuho audited financial statements until the late summer. 'Robust' analysis will be at a premium.Source • ourworldindata.orgCOVID CASE COUNT - Japan's COVID-19 daily case-count has trended down this week compared to the weel before and is now on a par with Sweden and Singapore. Daily fatalities are averaging double figures as this lagging statistics reflects the higher case count of two weeks ago and are still within the East Asian 'range' of 0-10 a day. New case counts of below 100 and a declining trend, as is the case in South Korea, Denmark and Austria will be required by the end of Golden Week on May 6th for Japan to consider any relaxation of its now nationwide 'state of emergency'. Source • ourworldindata.orgJAPAN'S TESTING VACUUM - We have noted the lack of testing in Japan in an earlier Insight and the two charts above from Oxford's Global Change Data Lab highlights Japan's outlier status in this regard and the implications for confirmed case counts and confirmed deaths. This deficiency has led many data scientists to study excess mortality rates. At present, there is insufficient data from the Health Ministry in Japan to make any valid comparisons. Based on other countries, Japan's excess mortality will likely price to be slightly higher for the over 65s and lower for everyone else. In any case, a massive testing capability will form a key component of any viable exit strategy.     Source • stopcovid19.jpOVERSHOOT - Unfortunately for patients and the government, hospitals are now full in many prefectures. Central Tokyo hospitals are turning away patients requiring ambulances to take patients to outlying parts of the prefecture - although this situation is not unusual in normal times. Despite ample time to prepare, the government has failed to provide for the 'overshoot' that they had been warning the public it was necessary to avoid. Japan also has a lower ratio of intensive care beds, (5) per 100,000 people, than many other developed countries. The previous policy of hospitalising every case, however mild, has been reversed and local governments have now requisitioned 210,000 hotel rooms to house those not in need of urgent medical intervention. While Japan's COVID-19 strategy has, so far, followed the less economically-damaging Swedish model (see below), a failure to address the hospital overshoot risks the country being forced to follow the UK's 'u-turn' into total lockdown from which exit strategies are much harder. Source • Tokyo Metropolitan GovernmentPEAKING OUT? On Sunday, Tokyo only 107 new cases, the lowest Sunday total for three weeks and the first decline. Tokyo now has over 3,000 cases out of a population of almost 14 million. The rate of doubling is now decelerating from one week to two weeks. Meanwhile, transit through major railway stations has declined by 70-80% across Japan. A lowering of new cases next week will be crucial to keep the hospitals from overflowing and the Prime Minister's reputation from falling further.FALLOUT - PM Abe's political capital is another casualty of this disease. It has emerged that his coalition partner the lay-Buddhist Komeito party threatened to walk out if the cash-for-all policy was not implemented requiring Abe to amend a previously-agreed budget bill much to the fury of the Ministry of Finance. The latter was able to require an application process as a means of limiting the amounts dispersed. However, in a bow to the changing circumstance, this process can be conducted online without, it seems, the need for in-person hanko certification. An additional complication is that Abe has 'fallen out' with his main bureaucratic 'fixer' and the main conduit with Komeito, Chief Cabinet Secretary Suga. Abe's poll ratings will probably never recover, and only his long-cherished desire to open the Tokyo Olympics in July 20121 will keep him in office. As will be true in many countries, the COVID-19 policy post mortems will be brutal and fatal for many previously Teflon-like political careers.Source • AgoopSource • @shinagawajp &gt; Blue bars = COVID-19 cases by Tokyo Ward   Orange Line = Concentration of people at 11 pmSource • @shinagawajp &gt; Blue bars = COVID-19 cases by Tokyo Ward  Red Line = Population earning more than ¥15m a yearHOTSPOTS &amp; FAT CATS - Some support for the government's policy of shutting down Tokyo's nightlife comes from data which correlates case count per Tokyo ward and population clusters in each area at 11 pm.  The correlation is much higher than both population levels and public transport transit through each ward. The second highest correlation was with income levels, suggesting that Tokyo' rich have a greater tendency to frequent bars, restaurants and other forms of evening entertainment, while no doubt considering themselves immune. This correlation has been anecdotally confirmed by the growing number of figures from the media and entertainment world who have contracted the disease and bears out the Tokyo Metropolitan Government's focus on avoiding the 3 'C's - Congregations Conversing in Confined spaces. The plug has been pulled on Tokyo's 'mizushobai' or 'water trade'.Source • Johns Hopkins CSSESource • LockdownTVPROF GIESECKE &amp; THE SWEDISH MODEL - Lastly, this video of an interview with retired Swedish epidemiologist, Professor Johan Giesecke, provides an update on the policy options that governments have faced in their responses to COVID-19, the background to Sweden's policy and the difficulties of exiting from lockdown strategies. A summary of his talk is as follows:-
Lockdown policies are not evidence-based
The correct policy is to protect the old and the frail only - this will eventually lead to herd immunity as a by-product - the initial UK response, which was similar to Sweden's was better  - before they made a 180 degree U-turn
The UK's Imperial College paper was not very good and he has never seen an unpublished paper have so much policy impact - the paper was  too pessimistic and any such models are a dubious basis for public policy
The flattening of the curve is due to the most vulnerable dying first as much as the lockdown policy
The outcomes will eventually be similar for all countries regardless of policy pursued
Covid-19 is a mild disease similar to the flu, and it was the novelty of the disease that scared people - the fatality rate of Covid-19 is the region of 0.1%
At least 50% of the population will be shown to have already had the disease when mass antibody testing becomes available - achieving 'herd immunity'
In the DETAIL below, we shall explore some of the emerging themes for the post-COVID-19 world, review the results, revisions and initial forecast announcements made on Friday and, finally, look at our lists the Moving Average 'Outliers'.  The positive/neutral/negative balance for Friday's three results announcements was 1:0:2. For the 20 revisions/forecasts, the split was 7:1:12 - although two of the positive outcomes were securities brokers making initial 'forecasts' of a year-on-year return to profitability after the full-year results have been finalised. Peer Groups revising down included Advertising Services, Apparel &amp; Footwear, Retail-Apparel &amp; Footwear, Hotels &amp; Resorts, Employment &amp; Staffing, and Restaurants. Upward revisions were seen in Retail-Food &amp; Drink, Personal Products, and Public Relations.

🇯🇵 JAPAN MARKET (& COVID-19) UPDATE 19th April - Overshoot

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. 

<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/124/934/original/2020-03-27_06-28-40.png?1585258181" class="editor-image img-responsive" data-smartkarma-image-id="124934"></figure><div class="content-caption">Source • Japan Analytics</div><p><strong>THURSDAY 26th MARCH</strong> - Yesterday saw six companies reporting results, of which only two -<a href="https://www.smartkarma.com/entities/optoelectronics-co-ltd" target="_blank" data-smartkarma-citation="entities:9374:1" rel="noopener">Optoelectronics (6664 JP)</a> and <a href="https://www.smartkarma.com/entities/fukushima-printing-co-ltd" target="_blank" data-smartkarma-citation="entities:3931:1" rel="noopener">Fukushima Printing (7870 JP)</a> - has positive scores. Seventeen companies revised their forecasts, and one made initial forecasts. In terms of our scoring system, the ratio of positive to negative 'scores' was 5:11, with <a href="https://www.smartkarma.com/entities/jxtg-holdings-inc" target="_blank" data-smartkarma-citation="entities:638:1" rel="noopener">JXTG (5020 JP) </a>being the largest negative-scoring company and <a href="https://www.smartkarma.com/entities/maxvalu-nishinihon-co-ltd" target="_blank" data-smartkarma-citation="entities:13743:1" rel="noopener">Maxvalu Nishinihon (8287 JP)</a> being unchanged. Of the six companies announcing results, only two had positive outcomes.</p><div class="content-caption"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/124/936/original/File%202020-03-27%200%2015%2036.jpeg?1585258841" class="editor-image img-responsive" data-smartkarma-image-id="124936"></figure></div><div class="content-caption">Source • NHK</div><p><strong>GOOD NEWS • BAD NEWS </strong>- The good news is that the increase in disclosed cases of Covid-19 outside Tokyo has not increased significantly; Tokyo, however, has seen an alarming rise. Forty-seven new cases were confirmed yesterday, taking the total in the metropolis to 259. Tokyo will implement a 'stay-at-home-policy' this weekend. Surrounding prefectures have encouraged their residents not to travel into the city over the weekend. Amusement parks that had reopened last weekend will now close their doors.</p><p><strong>ODD NEWS</strong> - In other 'news', the Sapporo Board of Education is debating whether to allow students to wear face masks that are not white. In the past, many schools have mandated that children can only have black hair, forcing some children whose hair is naturally lighter to dye their hair black to conform to the 'norm'.  </p>

Source • Japan AnalyticsTHURSDAY 26th MARCH - Yesterday saw six companies reporting results, of which only two -Optoelectronics (6664 JP) and Fukushima Printing (7870 JP) - has positive scores. Seventeen companies revised their forecasts, and one made initial forecasts. In terms of our scoring system, the ratio of positive to negative 'scores' was 5:11, with JXTG (5020 JP) being the largest negative-scoring company and Maxvalu Nishinihon (8287 JP) being unchanged. Of the six companies announcing results, only two had positive outcomes.Source • NHKGOOD NEWS • BAD NEWS - The good news is that the increase in disclosed cases of Covid-19 outside Tokyo has not increased significantly; Tokyo, however, has seen an alarming rise. Forty-seven new cases were confirmed yesterday, taking the total in the metropolis to 259. Tokyo will implement a 'stay-at-home-policy' this weekend. Surrounding prefectures have encouraged their residents not to travel into the city over the weekend. Amusement parks that had reopened last weekend will now close their doors.ODD NEWS - In other 'news', the Sapporo Board of Education is debating whether to allow students to wear face masks that are not white. In the past, many schools have mandated that children can only have black hair, forcing some children whose hair is naturally lighter to dye their hair black to conform to the 'norm'.  

🇯🇵 JAPAN • Revisions & Results Alert - 26th March

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

Brian Freitas

Pan-Asia Index Rebalances/ Events/ Delta One

Quantitative Analysis

<p style="text-align: left;">The Japan Exchange Group (JPX) publishes a daily report that details the short sell activity by market participants. JPX aggregates broker short sell reports and discloses information such as the short sale positions and the names of the investors whose short sale positions reach 0.5% of the outstanding shares. Here is some information on short positions for the week ended 16 August.</p><p style="text-align: left;">The short notional in the market for the week ended 16 August is US$24.65bn with the largest short positions in <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>, <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/canon-inc" target="_blank" rel="noopener" data-smartkarma-citation="entities:1:1">Canon Inc (7751 JP)</a>  and <a href="https://www.smartkarma.com/entities/sumitomo-mitsui-financial-gr" target="_blank" rel="noopener" data-smartkarma-citation="entities:217:1">Sumitomo Mitsui Financial (8316 JP)</a> <a href="https://www.smartkarma.com/entities/fast-retailing-co-ltd" target="_blank" rel="noopener" data-smartkarma-citation="entities:751:1"></a>. Most shorted stocks as a percentage of free float are Amazia, <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/leopalace21-corp" target="_blank" rel="noopener" data-smartkarma-citation="entities:8244:1">Leopalace21 Corp (8848 JP)</a>  while the stocks with the highest days to cover are <a href="https://www.smartkarma.com/entities/katakura-industries-co-ltd" target="_blank" rel="noopener" data-smartkarma-citation="entities:2007:1">Katakura Industries (3001 JP)</a>, <a href="https://www.smartkarma.com/entities/vital-ksk-holdings-inc" target="_blank" rel="noopener" data-smartkarma-citation="entities:7398:1">Vital Ksk Holdings (3151 JP)</a>, <a href="https://www.smartkarma.com/entities/mirait-holdings-corp" target="_blank" rel="noopener" data-smartkarma-citation="entities:7034:1">Mirait Holdings (1417 JP)</a> and <a href="https://www.smartkarma.com/entities/aruhi-corp" target="_blank" rel="noopener" data-smartkarma-citation="entities:26072:1">Aruhi Corp (7198 JP)</a>.</p><p style="text-align: left;">The largest increases in short notional over the week were <a href="https://www.smartkarma.com/entities/advantest-corp" target="_blank" rel="noopener" data-smartkarma-citation="entities:18107:1">Advantest Corp (6857 JP)</a>, <a href="https://www.smartkarma.com/entities/rakuten-inc" target="_blank" rel="noopener" data-smartkarma-citation="entities:31:1">Rakuten Inc (4755 JP)</a>, <a href="https://www.smartkarma.com/entities/jxtg-holdings-inc" target="_blank" rel="noopener" data-smartkarma-citation="entities:638:1">JXTG Holdings (5020 JP)</a> and <a href="https://www.smartkarma.com/entities/nomura-real-estate-master-fu" target="_blank" rel="noopener" data-smartkarma-citation="entities:22930:1">Nomura Real Estate Master Fund, (3462 JP)</a> while shorts were covered in <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/square-enix-holdings-co-ltd" target="_blank" rel="noopener" data-smartkarma-citation="entities:15003:1">Square Enix Holdings (9684 JP)</a>, <a href="https://www.smartkarma.com/entities/chugoku-electric-power-co" target="_blank" rel="noopener" data-smartkarma-citation="entities:16243:1">Chugoku Electric Power Co (9504 JP)</a> and <a href="https://www.smartkarma.com/entities/alps-alpine-co-ltd" target="_blank" rel="noopener" data-smartkarma-citation="entities:12001:1">Alps Alpine (6770 JP)</a>.   <a href="https://www.smartkarma.com/entities/zozo-inc" target="_blank" rel="noopener" data-smartkarma-citation="entities:18379:1"></a></p><p style="text-align: left;">Sectorally, new short positions were built in Information Technology, Industrials and Real Estate, while shorts were covered in Consumer Discretionary and Utilities.</p>

The Japan Exchange Group (JPX) publishes a daily report that details the short sell activity by market participants. JPX aggregates broker short sell reports and discloses information such as the short sale positions and the names of the investors whose short sale positions reach 0.5% of the outstanding shares. Here is some information on short positions for the week ended 16 August.The short notional in the market for the week ended 16 August is US$24.65bn with the largest short positions in Itochu Corp (8001 JP), Toyota Motor (7203 JP), Taiyo Yuden (6976 JP), Canon Inc (7751 JP)  and Sumitomo Mitsui Financial (8316 JP) . Most shorted stocks as a percentage of free float are Amazia, Taiyo Yuden (6976 JP), Tokai Carbon (5301 JP) and Leopalace21 Corp (8848 JP)  while the stocks with the highest days to cover are Katakura Industries (3001 JP), Vital Ksk Holdings (3151 JP), Mirait Holdings (1417 JP) and Aruhi Corp (7198 JP).The largest increases in short notional over the week were Advantest Corp (6857 JP), Rakuten Inc (4755 JP), JXTG Holdings (5020 JP) and Nomura Real Estate Master Fund, (3462 JP) while shorts were covered in Fast Retailing (9983 JP), Square Enix Holdings (9684 JP), Chugoku Electric Power Co (9504 JP) and Alps Alpine (6770 JP).   Sectorally, new short positions were built in Information Technology, Industrials and Real Estate, while shorts were covered in Consumer Discretionary and Utilities.

<div class="content-caption">
<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/091/044/original/2019-06-23_11-15-52.png?1561256166" class="editor-image img-responsive" data-smartkarma-image-id="91044"></figure><p></p>
<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/091/045/original/2019-06-23_11-21-43.png?1561256515" class="editor-image img-responsive" data-smartkarma-image-id="91045"></figure><p></p>
<p>Source: Japan Analytics</p>
</div><p><strong>RESILIENCE</strong> - Japanese equities have risen by 2.9% since the low of 4th June. In US dollar terms, the gain is 3.7%. Over the last two weeks, the gains are 0.7% and 1.6%, respectively. For the previous twelve months, the equity market has moved in almost perfect 'sync' with the US dollar/Japanese Yen exchange rate. This month's divergence is unusual, and it remains to be seen when, how, and if the gap will be closed. The cross rate is within ¥2.6 of the high points of the last two years. Barring any military sparring in the Middle East, any weakness in the Yen from current levels will be supportive of the equity market.</p><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/091/046/original/2019-06-23_11-51-30.png?1561258305" class="editor-image img-responsive" data-smartkarma-image-id="91046"></figure><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/091/047/original/2019-06-23_11-51-58.png?1561258329" class="editor-image img-responsive" data-smartkarma-image-id="91047"></figure><p></p><div class="content-caption">Source: Japan Analytics</div><p><strong>RSI &amp; TORAKU </strong>- Both the 5-day Relative Strength Index and the 25-Day Toraku Index have recovered to the middle of their normal range and suggest quieter days ahead, currency moves permitting.</p><div class="content-caption">
<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/091/065/original/2019-06-23_12-26-08.png?1561260389" class="editor-image img-responsive" data-smartkarma-image-id="91065"></figure><p></p> Source: Japan Analytics</div><p><strong>ABSOLUTE BREADTH</strong> - Our Absolute Breadth Index reached a new low for the year on Friday, but is well above the 0.5 level that would indicate a buying opportunity.</p><div class="content-caption">
<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/091/069/original/2019-06-23_12-30-22.png?1561260645" class="editor-image img-responsive" data-smartkarma-image-id="91069"></figure><p></p> Source: Japan Analytics</div><p><strong>VOLUME SCORE TIMELINE</strong> - Volumes remains concentrated in the <strong>Internet</strong>, <strong>Information Technology</strong>, <strong>REITs</strong>, <strong>Restaurants</strong>, and <strong>Energy</strong> Sectors, the <strong>Materials</strong>, <strong>Transportation</strong>, <strong>Utilities</strong>, and <strong>Multi-Industry</strong> Sectors are the volume laggards.</p><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/091/100/original/2019-06-23_13-32-38.png?1561264370" class="editor-image img-responsive" data-smartkarma-image-id="91100"></figure><div class="content-caption">Source: Japan Analytics</div><p><strong>VALUATION</strong> - The quarterly results for companies with January, April, July and October year-ends are now in, but have had little impact on the 'aggregates'. The trailing-twelve-month (TTM) PER is 14.4, and the Forecast PER is 13.9 - attractive relative to recent history but not at bargain-basement levels. </p><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/091/102/original/2019-06-23_13-44-36.png?1561265086" class="editor-image img-responsive" data-smartkarma-image-id="91102"></figure><div class="content-caption">Source: Japan Analytics</div><p><strong>RESULTS &amp; REVISION SCORES</strong> - Our scoring of aggregate Results and Revisions has also not seen any significant changes, although the trends are still downwards, especially for Interim Revisions.</p><div class="content-highlight"><p>In the <strong>DETAIL</strong> section below, we will review Sector performance, scores and valuation, Company Results &amp; Revisions and stock performance over the previous two weeks, as well as adding some brief comments on <a href="https://www.smartkarma.com/entities/kobe-bussan-co-ltd" target="_blank" data-smartkarma-citation="entities:4701:1" rel="noopener">Kobe Bussan (3038 JP)</a>, <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/pigeon-corp" target="_blank" data-smartkarma-citation="entities:3294:1" rel="noopener">Pigeon (7956 JP), </a><a href="https://www.smartkarma.com/entities/sanbio-co-ltd" target="_blank" data-smartkarma-citation="entities:24540:1" rel="noopener">SanBio (4592 JP)</a>, <a href="https://www.smartkarma.com/entities/ain-pharmaciez-inc" target="_blank" data-smartkarma-citation="entities:9313:1" rel="noopener">Ain (9627 JP)</a>, <a href="https://www.smartkarma.com/entities/fuji-seal-international-inc" target="_blank" data-smartkarma-citation="entities:8723:1" rel="noopener">Fuji Seal (7864 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>, <a href="https://www.smartkarma.com/entities/leopalace21-corp" target="_blank" data-smartkarma-citation="entities:8244:1" rel="noopener">Leopalace21 (8848 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>.​ ​ ​ ​​ ​ ​ ​</p></div>




Source: Japan Analytics
RESILIENCE - Japanese equities have risen by 2.9% since the low of 4th June. In US dollar terms, the gain is 3.7%. Over the last two weeks, the gains are 0.7% and 1.6%, respectively. For the previous twelve months, the equity market has moved in almost perfect 'sync' with the US dollar/Japanese Yen exchange rate. This month's divergence is unusual, and it remains to be seen when, how, and if the gap will be closed. The cross rate is within ¥2.6 of the high points of the last two years. Barring any military sparring in the Middle East, any weakness in the Yen from current levels will be supportive of the equity market.Source: Japan AnalyticsRSI &amp; TORAKU - Both the 5-day Relative Strength Index and the 25-Day Toraku Index have recovered to the middle of their normal range and suggest quieter days ahead, currency moves permitting.
 Source: Japan AnalyticsABSOLUTE BREADTH - Our Absolute Breadth Index reached a new low for the year on Friday, but is well above the 0.5 level that would indicate a buying opportunity.
 Source: Japan AnalyticsVOLUME SCORE TIMELINE - Volumes remains concentrated in the Internet, Information Technology, REITs, Restaurants, and Energy Sectors, the Materials, Transportation, Utilities, and Multi-Industry Sectors are the volume laggards.Source: Japan AnalyticsVALUATION - The quarterly results for companies with January, April, July and October year-ends are now in, but have had little impact on the 'aggregates'. The trailing-twelve-month (TTM) PER is 14.4, and the Forecast PER is 13.9 - attractive relative to recent history but not at bargain-basement levels. Source: Japan AnalyticsRESULTS &amp; REVISION SCORES - Our scoring of aggregate Results and Revisions has also not seen any significant changes, although the trends are still downwards, especially for Interim Revisions.In the DETAIL section below, we will review Sector performance, scores and valuation, Company Results &amp; Revisions and stock performance over the previous two weeks, as well as adding some brief comments on Kobe Bussan (3038 JP), Tsuruha (3391 JP), Pigeon (7956 JP), SanBio (4592 JP), Ain (9627 JP), Fuji Seal (7864 JP), Fanuc (6954 JP), Leopalace21 (8848 JP), and Obic (4684 JP).​ ​ ​ ​​ ​ ​ ​

🇯🇵 JAPAN • Market Update - Resilience

<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/078/341/original/2019-02-10_05-07-57.png?1549742898" class="editor-image img-responsive" data-smartkarma-image-id="78341"></figure><div class="content-caption">Source: Japan Analytics</div><p><strong>BOTTOM LINE BREAKDOWN</strong> - 1,277 earnings results and/or revisions announcements were released last week in Japan covering 36% of listed market capitalisation. The good news is that aggregate trailing-twelve-month (TTM) Operating Income only declined by ¥300b. Less welcome is the ¥1.7t decline in TTM Net Income to which <a href="https://www.smartkarma.com/entities/73" target="_blank" data-smartkarma-citation="entities:73:1">Toyota Motor (7203 JP)</a>, <a href="https://www.smartkarma.com/entities/154" target="_blank" data-smartkarma-citation="entities:154:1">Honda Motor (7267 JP)</a>, <a href="https://www.smartkarma.com/entities/315" target="_blank" data-smartkarma-citation="entities:315:1">Softbank Group (9984 JP)</a>, <a href="https://www.smartkarma.com/entities/7797" target="_blank" data-smartkarma-citation="entities:7797:1">Hitachi (6501 JP)</a> were the most significant contributors, each declining by more than ¥200b. Three 'financials', <a href="https://www.smartkarma.com/entities/742" target="_blank" data-smartkarma-citation="entities:742:1">Nomura Holdings (8604 JP)</a>, <a href="https://www.smartkarma.com/entities/219" target="_blank" data-smartkarma-citation="entities:219:1">Mizuho Financial Group (8411 JP)</a>, and <a href="https://www.smartkarma.com/entities/6267" target="_blank" data-smartkarma-citation="entities:6267:1">Suruga Bank (8358 JP)</a> subtracted ¥400b between them. Only <a href="https://www.smartkarma.com/entities/563" target="_blank" data-smartkarma-citation="entities:563:1">Sony (6758 JP)</a> and <a href="https://www.smartkarma.com/entities/637" target="_blank" data-smartkarma-citation="entities:637:1">Toshiba (6502 JP)</a> added more than ¥100b for the quarter. <strong>The substantial 'gap' between forecast and TTM Net Income has been reduced to just ¥600b, again confirming the reliability of corporate forecasting in Japan. The All-Market PER is now 13.5 times but will likely rise as aggregate Net Income falls further in the next two weeks.</strong></p><div class="content-highlight"><p><strong>In the DETAIL section below, we review this year's results of all listed companies in aggregate, update our All-Market and Sector Results &amp; Revision Scores and look at the twenty-five best and worst large-cap company results over the last week, with short comments on <a href="https://www.smartkarma.com/entities/13176" target="_blank" data-smartkarma-citation="entities:13176:1">Nabtesco Corp (6268 JP)</a>, <a href="https://www.smartkarma.com/entities/8467" target="_blank" data-smartkarma-citation="entities:8467:1">Workman (7564 JP)</a>, <a href="https://www.smartkarma.com/entities/20823" target="_blank" data-smartkarma-citation="entities:20823:1">Nakanishi (7716 JP)</a>, and <a href="https://www.smartkarma.com/entities/747" target="_blank" data-smartkarma-citation="entities:747:1">DeNA (2432 JP)</a></strong></p></div>

Source: Japan AnalyticsBOTTOM LINE BREAKDOWN - 1,277 earnings results and/or revisions announcements were released last week in Japan covering 36% of listed market capitalisation. The good news is that aggregate trailing-twelve-month (TTM) Operating Income only declined by ¥300b. Less welcome is the ¥1.7t decline in TTM Net Income to which Toyota Motor (7203 JP), Honda Motor (7267 JP), Softbank Group (9984 JP), Hitachi (6501 JP) were the most significant contributors, each declining by more than ¥200b. Three 'financials', Nomura Holdings (8604 JP), Mizuho Financial Group (8411 JP), and Suruga Bank (8358 JP) subtracted ¥400b between them. Only Sony (6758 JP) and Toshiba (6502 JP) added more than ¥100b for the quarter. The substantial 'gap' between forecast and TTM Net Income has been reduced to just ¥600b, again confirming the reliability of corporate forecasting in Japan. The All-Market PER is now 13.5 times but will likely rise as aggregate Net Income falls further in the next two weeks.In the DETAIL section below, we review this year's results of all listed companies in aggregate, update our All-Market and Sector Results &amp; Revision Scores and look at the twenty-five best and worst large-cap company results over the last week, with short comments on Nabtesco Corp (6268 JP), Workman (7564 JP), Nakanishi (7716 JP), and DeNA (2432 JP)

Japan: Results & Revisions Second Cut - Bottom Line Breakdown

Japan

INPEX CORPORATION is a holding company established through the reorganization of INPEX Corp and Teikoku Oil.  The Company manages subsidiaries that explores, produces, and sells oil and natural gas.

Idemitsu Kosan Co., Ltd. explores, imports, refines, and distributes petroleum and its related products.  The Company also manufactures and sells petrochemical products.

Cosmo Energy Holdings Co., Ltd. operates as a holding company.  The Company, through its subsidiaries, imports, refines, and sells crude oil as well engages in the independent development of oil resources.

Japan Petroleum Exploration Co., Ltd. explores, develops, and markets petroleum products such as crude oil and natural gas.

NIPPON GAS CO., LTD. provides LPG (liquefied petroleum gas), gas related apparatus, gas air conditioning equipment, and gas supplying work.  The Company also operates real estate business.

ITOCHU ENEX CO., LTD. distributes various kinds of fuel products such as oil, gasoline, and liquefied petroleum gas.  The Company, affiliated with Itochu Corp, manages many gas stations as well as convenience stores.  Itochu Enex also provides catalog sales of household goods.

MITSUUROKO GROUP HOLDINGS CO., LTD. wholesales a variety of fuel products such as liquefied petroleum gas, coal, and briquettes products.  The Company also sells gas appliances and oil-heating equipment.  MITSUUROKO operates office leasing business as well.

SAN-AI OIL CO., LTD. primarily wholesales petroleum and LP gas nationwide.  The Company also supplies fuels for aircrafts at Haneda Airport.  San-Ai Oil has business divisions including industry energy, gas, chemical and research, and business development.

SALA CORPORATION is a holding company which operates and manages its subsidiaries.  The Company provides energy supply and solution, and facility management services through its subsidiaries.  Other services include infrastructure development, animals' health care, auto services, and logistic business.

SINANEN HOLDINGS CO., LTD. is a fuel distributor specializing in petroleum products. The Company diversifies into briquettes, liquefied petroleum gas, and other petroleum products.  Sinanen also sells cooling/heating equipment and hot water supply system as well as operates real estate businesses.

PTT Exploration and Production Public Company Limited explores for crude oil and natural gas, develops fields for production, and produces oil and natural gas. The Company is a subsidiary of the Petroleum Authority of Thailand.

China Petroleum & Chemical Corporation produces and trades petroleum and petrochemical products. The Company offers gasoline, diesel, jet fuel, kerosene, ethylene, synthetic fibers, synthetic rubber, synthetic resins, and chemical fertilizers. China Petroleum & Chemical markets its products throughout China.

Santos Limited explores for and produces natural gas, crude oil, condensate, naphtha and liquid petroleum gas.  The Company conducts major onshore and offshore petroleum exploration activities at oil and gas fields in Australia (Cooper/Eromanga Basins), the United States (Gulf of Mexico), Indonesia and Papua New Guinea. The Company also transports crude oil by pipeline.

Origin Energy Limited is an integrated energy company. The Company is an energy retailer in Australia across electricity, gas and LPG. Origin Energy also holds a generation portfolio and fuel position and a renewable energy portfolio, as well as unconventional gas and LNG interests.

APA Corporation operates as an oil and gas company. The Company focuses on exploration and production of oil and gas properties. APA serves clients worldwide.

Marathon Oil Corporation is an independent international energy company engaged in exploration and production, oil sands mining and integrated gas. The Company's operations are focused in North America, Africa and Europe.

EQT Corporation is an integrated energy company with emphasis on Appalachian area natural-gas supply, transmission and distribution. The Company, through its subsidiaries, offer natural gas products to wholesale and retail customers.

Bharat Petroleum Corporation Limited explores for and refines crude oil. The Company manufactures petroleum, petroleum products, lubricants, liquefied petroleum gas, aromatics like benzene and toluene, and other related products. Bharat has retail outlets throughout the country.

Chesapeake Energy Corporation produces oil and natural gas. The Company's operations are focused on discovering, developing, and acquiring conventional and unconventional natural gas reserves onshore in the United States.

PT Dian Swastatika Sentosa Tbk generates electricity and steam.  The Company owns  and operates coal- and gas-fired plants.

ENEOS Holdings, Inc. operates refining and marketing businesses. The Company refines and distributes petroleum and petroleum chemical products. ENEOS Holdings also provides non ferrous metals, electronic materials, and other products.

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ENEOS Holdings (5020 JP)

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