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

Event-Driven

<ul>
<li>The review period for 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> September rebalance ends in July. There could be three changes at the rebalance with sector balance in focus for the additions.</li>
<li>Depending on the changes, passive trackers will need to buy between 5-16x ADV (10.1%-24% of real float) on the inclusions and sell between 4-42x ADV on the deletions.</li>
<li>
<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> will be capped to 10% of the index weight while <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> is also close to the 10% cap.</li>
</ul>


The review period for the Nikkei 225 (NKY INDEX) September rebalance ends in July. There could be three changes at the rebalance with sector balance in focus for the additions.
Depending on the changes, passive trackers will need to buy between 5-16x ADV (10.1%-24% of real float) on the inclusions and sell between 4-42x ADV on the deletions.

Fast Retailing (9983 JP) will be capped to 10% of the index weight while Tokyo Electron (8035 JP) is also close to the 10% cap.


Nikkei 225 Index Rebalance Preview (Sep 2024): Ranking, Capping, Funding & Other Changes

Pan-Asia Catalysts/Events, Quiddity Advisors

Travis Lundy

Pan-Asia Catalysts/Events

Quiddity Advisors

<ul>
<li>
<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> today announced better than guided results, and 10% revenue growth, 18% OP growth to August 2024. NP is light, but still well higher than street consensus.</li>
<li>At 10.37% Nikkei 225 weight, it is still above the target for 31 July 2024. If it does not underperform Nikkei 225 between now and then, US$2bn to sell end-Sep24.</li>
<li>If people like the growthiness, that can be absorbed. But if the stock were to go up 10% vs Nikkei, there'd be US$2bn, then maybe another US$2bn to sell. </li>
</ul>



Fast Retailing (9983 JP) today announced better than guided results, and 10% revenue growth, 18% OP growth to August 2024. NP is light, but still well higher than street consensus.
At 10.37% Nikkei 225 weight, it is still above the target for 31 July 2024. If it does not underperform Nikkei 225 between now and then, US$2bn to sell end-Sep24.
If people like the growthiness, that can be absorbed. But if the stock were to go up 10% vs Nikkei, there'd be US$2bn, then maybe another US$2bn to sell. 


Fast Retailing (9983) Beats Guidance, Stronger Forecasts, STILL Has a Nikkei 225 Problem

Japan Specialist

Mark Chadwick

Equity Bottom-Up

<ul>
<li>Fast Retailing’s stock price is overvalued and faces downside risks from its Q3 results (maybe), China outlook (perhaps), and index rebalancing (most likely).</li>
<li>Fast Retailing has enjoyed a premium over its global peers largely due to its higher exposure to China growth. Any wobbles here could be negative catalyst</li>
<li>There is also a technical issue that will likely cap the weighting of Fast Retailing in the Nikkei 225 = index selling pressure</li>
</ul>


Fast Retailing’s stock price is overvalued and faces downside risks from its Q3 results (maybe), China outlook (perhaps), and index rebalancing (most likely).
Fast Retailing has enjoyed a premium over its global peers largely due to its higher exposure to China growth. Any wobbles here could be negative catalyst
There is also a technical issue that will likely cap the weighting of Fast Retailing in the Nikkei 225 = index selling pressure


Fast Retailing (9983) | Is China Still Recovering?

Equity Analyst, LightStream Research

Oshadhi Kumarasiri

Equity Analyst

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.

<ul>
<li>Japan's strong domestic demand and a rebound in China fuel optimistic growth outlook for <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> in the short term.</li>
<li>Furthermore, the markets such as Europe, North America, South East Asia, India, and Australia present promising long-term growth opportunities.</li>
<li>However, Fast Retailing's valuation is a cause for concern as it currently trades at a consensus FY27 OP of 20.0x.</li>
</ul>


Japan's strong domestic demand and a rebound in China fuel optimistic growth outlook for Fast Retailing (9983 JP) in the short term.
Furthermore, the markets such as Europe, North America, South East Asia, India, and Australia present promising long-term growth opportunities.
However, Fast Retailing's valuation is a cause for concern as it currently trades at a consensus FY27 OP of 20.0x.


Fast Retailing: Opportunities for Long-Term Growth Overshadowed by High Valuation

<ul>
<li>
<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> announced Q2 earnings two weeks ago. Revenues were good. OP was good. And the company raised full-year forecasts for Sales, OP, Pre-tax, and Net Profit.</li>
<li>The stock popped sharply. It isn't "cheap" but it is under-owned, actively. And revenues up 20%yoy is a very good look.  </li>
<li>The Conundrum: the more active investors decide they like it, the more there is to sell. That creates interesting opportunities.
</li>
</ul>



Fast Retailing (9983 JP) announced Q2 earnings two weeks ago. Revenues were good. OP was good. And the company raised full-year forecasts for Sales, OP, Pre-tax, and Net Profit.
The stock popped sharply. It isn't "cheap" but it is under-owned, actively. And revenues up 20%yoy is a very good look.  
The Conundrum: the more active investors decide they like it, the more there is to sell. That creates interesting opportunities.



The Fast Retailing (9983) Selldown Conundrum - Not Now, But Soon... Then For A Long Time

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.

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Fast Retailing (9983 JP)

Nikkei 225 Index Rebalance Preview (Sep 2024): Ranking, Capping, Funding & Other Changes

There could be 3 changes for the NKY in September with sector balance determining the inclusions. Fast Retailing will be capped while Tokyo...

Brian Freitas

Fast Retailing (9983) Beats Guidance, Stronger Forecasts, STILL Has a Nikkei 225 Problem

Fast Retailing beat its guidance and consensus forecasts, and guidance to Aug 2024 is ahead of consensus by a ways. But the stock still has a...

Travis Lundy

Fast Retailing (9983) | Is China Still Recovering?

Fast Retailing’s stock price is overvalued and faces downside risks from its Q3 results (maybe), China outlook (perhaps), and index rebalancing...

Mark Chadwick

Fast Retailing: Opportunities for Long-Term Growth Overshadowed by High Valuation

Markets such as Europe, North America, South East Asia, India, and Australia present promising long-term growth opportunities, but at a consensus...

Oshadhi Kumarasiri

The Fast Retailing (9983) Selldown Conundrum - Not Now, But Soon... Then For A Long Time

Fast Retailing has overhang. On a realtime basis, that disappears if FR underperforms Nikkei 225 by 2% in the next 3 months. But it comes back next...

Travis Lundy

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