'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/000/162/974/original/File%202020-10-01%2015%2010%2035.jpeg?1601583635" class="editor-image img-responsive" data-smartkarma-image-id="162974"></figure><div class="content-caption">Source: NHK</div>FAILOVERFAILURE - The failure of the Fail Over system in <a href="https://www.smartkarma.com/entities/japan-exchange-group-inc" target="_blank" data-smartkarma-citation="entities:11266:1" rel="noopener">Japan Exchange (8697 JP)</a> / <a href="https://www.smartkarma.com/entities/fujitsu-ltd" target="_blank" data-smartkarma-citation="entities:16968:1" rel="noopener">Fujitsu (6702 JP)</a> 'arrowhead' trading system on Thursday morning resulted in an unprecedented full-day market suspension. The details and implication will be covered in a separate Insight; however, the embarrassment to Japan's financial system is extreme. The Chief Cabinet Secretary was particularly blunt:-<blockquote>
 Currently, the Financial Services Agency is instructing the Japan Exchange Group and the Tokyo Stock Exchange to investigate the cause and take measures for recovery, and we are working diligently to recover. I know that the inability to trade on the exchange, which is an important infrastructure of the market, limits the opportunities for trading for investors, and I think it is very regrettable.   
<h3>Katō Katsunobu, Naikaku-kanbō-chōkan</h3>
October 1st, 2020
</blockquote><hr>• BEST &amp; WORST •The release of earnings announcements, forecasts and revisions was unaffected, and our best and worst pair is medical wear manufacturer <a href="https://www.smartkarma.com/entities/nagaileben-co-ltd" target="_blank" data-smartkarma-citation="entities:3165:1" rel="noopener">Nagaileben (7447 JP)</a> and waste management company <a href="https://www.smartkarma.com/entities/daiseki-co-ltd" target="_blank" data-smartkarma-citation="entities:2330:1" rel="noopener">Daiseki (9793 JP)</a>.<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/162/977/original/2020-10-02_06-08-02.png?1601586653" class="editor-image img-responsive" data-smartkarma-image-id="162977"></figure><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/162/976/original/2020-10-02_06-10-05.png?1601586638" class="editor-image img-responsive" data-smartkarma-image-id="162976"></figure><div class="content-caption">Source for all charts &amp; tables unless otherwise stated: Japan Analytics</div><div>DAILY STATS</div><hr><div>12 Quarterly Results</div><div><ul style="list-style-type: disc;">
<li>Results Score: 67% Positive / 10% Neutral / 33% Negative</li>
<li>Average Results Score Change: +3.1 points</li>
<li>Average % Change in Revenue: 3.0% Quarter YoY / +1.9% Rolling TTM YoY </li>
<li>Average Operating Profit Margin Change: 0.5ppt</li>
<li>Percentage Making Quarterly Losses: 0%</li>
</ul></div><hr><div>7 Annual • 5 Interim Forecasts/Revisions</div><ul style="list-style-type: disc;">
<li>Annual Forecast/Revision Score: 57% Positive / 0% Neutral / 43% Negative</li>
<li>Interim Forecast/Revision Score Change: 60% Positive / 20% Neutral / 20% Negative</li>
<li>Average Forecast/Revision Score Change: +4.0 points</li>
</ul><div class="content-highlight">Although the sample size is small the 'stats' above are the best since we started this daily series. </div>

Source: NHKFAILOVERFAILURE - The failure of the Fail Over system in Japan Exchange (8697 JP) / Fujitsu (6702 JP) 'arrowhead' trading system on Thursday morning resulted in an unprecedented full-day market suspension. The details and implication will be covered in a separate Insight; however, the embarrassment to Japan's financial system is extreme. The Chief Cabinet Secretary was particularly blunt:-
 Currently, the Financial Services Agency is instructing the Japan Exchange Group and the Tokyo Stock Exchange to investigate the cause and take measures for recovery, and we are working diligently to recover. I know that the inability to trade on the exchange, which is an important infrastructure of the market, limits the opportunities for trading for investors, and I think it is very regrettable.   
Katō Katsunobu, Naikaku-kanbō-chōkan
October 1st, 2020
• BEST &amp; WORST •The release of earnings announcements, forecasts and revisions was unaffected, and our best and worst pair is medical wear manufacturer Nagaileben (7447 JP) and waste management company Daiseki (9793 JP).Source for all charts &amp; tables unless otherwise stated: Japan AnalyticsDAILY STATS12 Quarterly Results
Results Score: 67% Positive / 10% Neutral / 33% Negative
Average Results Score Change: +3.1 points
Average % Change in Revenue: 3.0% Quarter YoY / +1.9% Rolling TTM YoY 
Average Operating Profit Margin Change: 0.5ppt
Percentage Making Quarterly Losses: 0%
7 Annual • 5 Interim Forecasts/Revisions
Annual Forecast/Revision Score: 57% Positive / 0% Neutral / 43% Negative
Interim Forecast/Revision Score Change: 60% Positive / 20% Neutral / 20% Negative
Average Forecast/Revision Score Change: +4.0 points
Although the sample size is small the 'stats' above are the best since we started this daily series. 

🇯🇵 JAPAN • Results & Revisions 10/​​​​01 - Fail Over Fail, Nagaileben, Daiseki, Kewpie

Silver Point

Thomas J. Monaco

Independent Insight Provider

Silver Point is a boutique research firm that focuses on the broader financial services sector, with a particular focus on troubled institutions globally. 

Asia Ex Japan

Equity Bottom-Up

<ul>
<li>
Early Retirement: Hong Kong Exchanges &amp; Clearing (388.HK) [HKEx] announced that CEO Charles Li has informed the Board of Directors of his early retirement – following the announcement earlier in  the year that he would not seek re-appointment after October 2021. CEO Li will remain on as CEO and an ex-officio member of the Board until the end of 2020, and become a senior advisor to the Board for six months from January 1st; and </li>
<li>
Focus, Focus, Focus: This is a management team, who all too often, gets distracted and fails to meet both near and long-term targets. That outrageous London Stock Exchange bid of USD 39 bn alone should have cost Charles Li his CEO title. Nevertheless, we are hopeful that HKEx has learned that this failure/distraction has caused an enormous loss of market confidence. </li>
</ul>



Early Retirement: Hong Kong Exchanges &amp; Clearing (388.HK) [HKEx] announced that CEO Charles Li has informed the Board of Directors of his early retirement – following the announcement earlier in  the year that he would not seek re-appointment after October 2021. CEO Li will remain on as CEO and an ex-officio member of the Board until the end of 2020, and become a senior advisor to the Board for six months from January 1st; and 

Focus, Focus, Focus: This is a management team, who all too often, gets distracted and fails to meet both near and long-term targets. That outrageous London Stock Exchange bid of USD 39 bn alone should have cost Charles Li his CEO title. Nevertheless, we are hopeful that HKEx has learned that this failure/distraction has caused an enormous loss of market confidence. 


Hong Kong Exchanges & Clearing – Addition By Subtraction

*Monthly Stats Decent:Singapore Exchange (SGX.SP) [SGX] recently reported its August 2020 monthly market metrics. SGX’s market volumes increased 11% MOM (SGX Mainboard volumes increased 13% MOM), whist velocity was higher than previous months averages at 56%. That said, market volumes have begun to normalize after a strong rally post the COVID-19 valuation trough; *Taiwan A Standout: While MSCI Taiwan contracts declined 19% MOM, volumes on the new FTSE Taiwan Index did exhibit an increase of 3.3x - from 82 thousand contracts during July to 352 contracts this month. SGX accounted for 99.5% of the notional traded offshore on the MSCI Taiwan. To put this in perspective, the FTSE Taiwan contracts traded were 20% of the total Taiwan contracts traded versus just 5% in July; and   * Deals Wave of Future: SGX is hopeful to achieve synergies from newly acquired subsidiaries, such as its additional 80% stake in BidFX,a cloud-based on-line F/X trading platform. SGX is going to have to be a bit more creative to generate revenue with the Hong Kong Exchanges &amp; Clearing (388.HK) likely to be directly competing with the A50 – on of SGX’s bread and butter products.

*Monthly Stats Decent:Singapore Exchange (SGX.SP) [SGX] recently reported its August 2020 monthly market metrics. SGX’s market volumes increased 11% MOM (SGX Mainboard volumes increased 13% MOM), whist velocity was higher than previous months averages at 56%. That said, market volumes have begun to normalize after a strong rally post the COVID-19 valuation trough; *Taiwan A Standout: While MSCI Taiwan contracts declined 19% MOM, volumes on the new FTSE Taiwan Index did exhibit an increase of 3.3x - from 82 thousand contracts during July to 352 contracts this month. SGX accounted for 99.5% of the notional traded offshore on the MSCI Taiwan. To put this in perspective, the FTSE Taiwan contracts traded were 20% of the total Taiwan contracts traded versus just 5% in July; and   * Deals Wave of Future: SGX is hopeful to achieve synergies from newly acquired subsidiaries, such as its additional 80% stake in BidFX,a cloud-based on-line F/X trading platform. SGX is going to have to be a bit more creative to generate revenue with the Hong Kong Exchanges &amp; Clearing (388.HK) likely to be directly competing with the A50 – on of SGX’s bread and butter products. 

Singapore Exchange – Taiwan A Standout In August

*SFC Approves ETF Listings: Hong Kong’s Securities and Futures Commission (SFC) actually accelerated the authorization two ETFs to be listed on the Hong Kong Exchanges &amp; Clearing (388.HK) [HKEx] under the "ETF Connect Scheme" in order to facilitate the cross-listing of ETFs between Hong Kong and mainland China. This should serve as a prelude for further cooperation between both markets; and
*Further to Run: The recent share price run appears to have a bit further to go, as the the entire suite of US-listed mainland Chinese ADRs is hoped to be ambitiously shifted to HKEx along with a consequent increase in market velocity. In addition to the ADR story, HKEx looks to be the beneficiary of derivatives and ETF business development, and the IPO listing share for HKEx.

*SFC Approves ETF Listings: Hong Kong’s Securities and Futures Commission (SFC) actually accelerated the authorization two ETFs to be listed on the Hong Kong Exchanges &amp; Clearing (388.HK) [HKEx] under the "ETF Connect Scheme" in order to facilitate the cross-listing of ETFs between Hong Kong and mainland China. This should serve as a prelude for further cooperation between both markets; and
*Further to Run: The recent share price run appears to have a bit further to go, as the the entire suite of US-listed mainland Chinese ADRs is hoped to be ambitiously shifted to HKEx along with a consequent increase in market velocity. In addition to the ADR story, HKEx looks to be the beneficiary of derivatives and ETF business development, and the IPO listing share for HKEx.

Hong Kong Exchanges & Clearing – SFC Approval

*Mixed 2Q20 Result: Hong Kong Exchanges &amp; Clearing (388.HK) [HKEx] reported 2Q20 EPS of HKD 2.37, exceeding consensus forecasts.  Revenues were driven by strong turnover in 2Q20, whilst  Investment income reversed course post-1Q20 trough which benefitted from the market’s strong recovery, and were a big swing factor  - recording returns of HKD 383 mn versus a  1Q20 loss of HKD 521mn. Derivative income was weak during 2Q20; and*Further to Run: HKEx’s share price has increased HKD 152.40 (72.1%) since its pandemic panic trough of March 21, 2020. The run appears to price in the entire suite of US-listed mainland Chinese ADRs to be ambitiously shifted to HKEx along with market velocity – which in reality will take years to achieve, if at all. In addition to the ADR story, HKEx looks to be the beneficiary of derivatives and ETF business development, and the IPO listing share for HKEx.

*Mixed 2Q20 Result: Hong Kong Exchanges &amp; Clearing (388.HK) [HKEx] reported 2Q20 EPS of HKD 2.37, exceeding consensus forecasts.  Revenues were driven by strong turnover in 2Q20, whilst  Investment income reversed course post-1Q20 trough which benefitted from the market’s strong recovery, and were a big swing factor  - recording returns of HKD 383 mn versus a  1Q20 loss of HKD 521mn. Derivative income was weak during 2Q20; and*Further to Run: HKEx’s share price has increased HKD 152.40 (72.1%) since its pandemic panic trough of March 21, 2020. The run appears to price in the entire suite of US-listed mainland Chinese ADRs to be ambitiously shifted to HKEx along with market velocity – which in reality will take years to achieve, if at all. In addition to the ADR story, HKEx looks to be the beneficiary of derivatives and ETF business development, and the IPO listing share for HKEx.

Hong Kong Exchanges & Clearing – Mixed 2Q20 Results

Japan

Daiwa Securities Group Inc. is a holding company. The Group provides a comprehensive financial services including dealing, brokerage, underwriting, and distribution of securities.  Other services are research & systems development, custody service, and asset management. Daiwa has subsidiaries in US, Europe, Asia, and Middle East.

SBI Holdings, Inc. manages venture capital fund which mainly invest in Internet related venture companies.  The Company also provides brokerage, investment banking, and financial services.

MATSUI SECURITIES CO., LTD. provides online brokerage services through its website.  The Company offers investment news and educational services.

Ichigo Inc. is a value-add real estate company. The Company's three key businesses are Value-Add, in which Ichigo acquires and improves mid-sized, prime location real estate, Asset Management including the Ichigo Office REIT (8975), and Clean Energy, in which Ichigo builds and operates solar power plants  on disused land nationwide.

Monex Group, Inc. is a holding company, which was established through merger between Monex and Nikko Beans. The Company manages its subsidiaries that provides investing services for self-directed investors through Internet and telephone.

OKASAN SECURITIES GROUP INC. is a comprehensive securities firm based in Mie Prefecture.  The Company is active in stock transaction for individual investors.  Okasan Holdings provides financial services such as the dealing, brokerage, underwriting, and distribution of securities.  The Company also provides investment consulting and trust services.

Tokai Tokyo Financial Holdings, Inc. is a comprehensive securities firm. The Company provides financial services such as dealing, distribution, brokerage, underwriting, and distribution of securities and investment trust.

Aizawa Securities Co Ltd is a comprehensive securities firm. The Company provides financial services such as dealing, brokerage, underwriting, and distribution of securities, and investment trust.

JAFCO Co., Ltd. forms venture capital groups to invest primarily in domestic and foreign private companies with high potential for future growth.  The Company also provides management services to the groups, makes loans and offers consultation services to the invested companies.

M&A Capital Partners Co., Ltd. is an M&A advisory firm. The Company provides advisory service in M&A due diligence, business strategy, corporate regeneration, capital increase strategy to support owners of small and medium companies with business succession.

Haitong Securities Co., Ltd. offers securities services. The Company provides securities brokerage, asset management, securities investment, share transfer agency, and capital intermediary services. Haitong Securities focuses on  online brokerage, wealth management, and institutional investors.

Haitong Securities Co Ltd (A) (600837 CH)

Huatai Securities Co., Ltd. provides financial company. The Company provides securities brokerage services, research consulting services, investment banking and direct investment services, fixed-income services and asset management services.

Yuanta Financial Holding Co., Ltd. is a holding company. Its main businesses include brokerage, margin financing, domestic and overseas issuance, financial and M&A advisory, primary listings, corporate financial, securities underwriting and placements, etc. The company also holds the leading position in the derivatives business.

Pershing Square Holdings Ltd is a closed-ended hedge fund vehicle incorporated in Guernsey.

Houlihan Lokey, Inc. operates as an investment bank. The Company offers mergers and acquisitions, financial restructuring, capital markets, strategic consulting, and financial advisory services. Houlihan Lokey serves customers worldwide.

Interactive Brokers Group, Inc. is an automated global electronic market maker and broker specializing in routing orders and executing and processing trades in securities, futures, and foreign exchange instruments.

GF Securities Co Ltd. is a securities firm. The Company offers investment banking services including equity and bond underwriting, mergers and acquisitions consulting, financial consulting, brokerage services, and asset management services.

LPL Financial Holdings, Inc. offers technology, brokerage and investment advisory services through business relationships with all types of financial advisors. Through proprietary technology, custody and clearing platforms, the Company offers access to financial products and services that enable them to provide financial advice and brokerage services to retail investors.

Franklin Resources, Inc. (d.b.a. Franklin Templeton Investments) provides investment advisory services to mutual fund, retirement, institutional/separate accounts and high net worth investors. The Company manages various asset classes including global equity, global institutional and municipal fixed income, money funds, alternative investments, and hedge funds.

Jefferies Financial Group Inc. is a global diversified financial services company focusing on investment banking and capital markets, asset management and direct investing. The Company offers a full range of investment banking, equities, fixed income, asset and wealth management products and services.

Japan Exchange Group Inc is the holding company created through the merger of Tokyo Stock Exchange Group, Inc and Osaka Securities Exchange Co., Ltd. The group provides and operates a marketplace for the trading of equities, futures, and options. The Group manages the trading, as well as administers listed stocks and registered members.

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Japan Exchange Group (8697 JP)

🇯🇵 JAPAN • Results & Revisions 10/01 - Fail Over Fail, Nagaileben, Daiseki, Kewpie

FAIL OVER -

Campbell Gunn

Hong Kong Exchanges & Clearing – Addition By Subtraction

Early Retirement: Hong Kong Exchanges & Clearing (388.HK) [HKEx] announced that CEO Charles Li has informed the Board of Directors of his...

Thomas J. Monaco

Singapore Exchange – Taiwan A Standout In August

*Monthly Stats Decent: Singapore Exchange (SGX.SP) [SGX] recently reported its August 2020 monthly market metrics. SGX’s market volumes increased...

Thomas J. Monaco

Hong Kong Exchanges & Clearing – SFC Approval

*SFC Approves ETF Listings: Hong Kong’s Securities and Futures Commission (SFC) actually accelerated the authorization two ETFs to be listed on the...

Thomas J. Monaco

Hong Kong Exchanges & Clearing – Mixed 2Q20 Results

*Mixed 2Q20 Result: Hong Kong Exchanges & Clearing (388.HK) [HKEx] reported 2Q20 EPS of HKD 2.37, exceeding consensus forecasts. Revenues were...

Thomas J. Monaco

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🇯🇵 JAPAN • Results & Revisions 10/​​​​01 - Fail Over Fail, Nagaileben, Daiseki, Kewpie

FAIL OVER -

Campbell Gunn

Hong Kong Exchanges & Clearing – Addition By Subtraction

Early Retirement: Hong Kong Exchanges & Clearing (388.HK) [HKEx] announced that CEO Charles Li has informed the Board of Directors of his...

Thomas J. Monaco

Singapore Exchange – Taiwan A Standout In August

*Monthly Stats Decent: Singapore Exchange (SGX.SP) [SGX] recently reported its August 2020 monthly market metrics. SGX’s market volumes increased...

Thomas J. Monaco

Hong Kong Exchanges & Clearing – SFC Approval

*SFC Approves ETF Listings: Hong Kong’s Securities and Futures Commission (SFC) actually accelerated the authorization two ETFs to be listed on the...

Thomas J. Monaco

Hong Kong Exchanges & Clearing – Mixed 2Q20 Results

*Mixed 2Q20 Result: Hong Kong Exchanges & Clearing (388.HK) [HKEx] reported 2Q20 EPS of HKD 2.37, exceeding consensus forecasts. Revenues were...

Thomas J. Monaco

🇯🇵 JAPAN • Results & Revisions 10/01 - Fail Over Fail, Nagaileben, Daiseki, Kewpie