Pan-Asia Index Flows & Special Situations, Quiddity Advisors

Janaghan Jeyakumar, CFA

Pan-Asia Index Flows & Special Situations

Quiddity Advisors

Pan-Asia Catalysts/Events

Quantitative Analysis

In this insight, we take a look at the monthly performance of the trading opportunities surrounding TOPIX Index Rebalance events. During the month of June, we witnessed <a href="https://www.smartkarma.com/entities/meiko-electronics-co-ltd" target="_blank" data-smartkarma-citation="entities:20004:1" rel="noopener">Meiko Electronics (6787 JP)</a>, a stock tracked by Quiddity as a potential TSE Prime candidate, confirm its TSE Prime move. Furthermore, we also witnessed high growth SaaS company <a href="https://www.smartkarma.com/entities/money-forward-inc" target="_blank" data-smartkarma-citation="entities:25919:1" rel="noopener">Money Forward (3994 JP)</a> announce its move to TSE Prime potentially triggering a large inclusion event at the end of July 2021.  Below is a discussion of the situations covered by Quiddity in the Pre-event, Live-event, and Post-event categories during the month of June 2021.

In this insight, we take a look at the monthly performance of the trading opportunities surrounding TOPIX Index Rebalance events. During the month of June, we witnessed Meiko Electronics (6787 JP), a stock tracked by Quiddity as a potential TSE Prime candidate, confirm its TSE Prime move. Furthermore, we also witnessed high growth SaaS company Money Forward (3994 JP) announce its move to TSE Prime potentially triggering a large inclusion event at the end of July 2021.  Below is a discussion of the situations covered by Quiddity in the Pre-event, Live-event, and Post-event categories during the month of June 2021.   

Pan-Asia Catalysts/Events, Quiddity Advisors

Travis Lundy

Event-Driven

On 8 March, <a href="https://www.smartkarma.com/entities/meiko-electronics-co-ltd" target="_blank" data-smartkarma-citation="entities:20004:1" rel="noopener">Meiko Electronics (6787 JP)</a> announced its intention to transfer from JASDAQ to TOPIX - the first such company to do so under the new TSE1 Listing Criteria - with implied desire for future membership in TSE Prime - since the rules went into effect on 1 November 2021. I wrote about that in <a href="https://www.smartkarma.com/insights/topix-inclusion-pre-event-for-meiko-electronics-6787" target="_blank" data-smartkarma-citation="insights:48942" rel="noopener">TOPIX Inclusion Pre-Event for Meiko Electronics (6787)</a> that day.Today, the company announced that it had received approval to move to the TSE1, effective 18 June. That means it will be included in TOPIX at the close of the second-to-last business day of July.More details of this index event below.

On 8 March, Meiko Electronics (6787 JP) announced its intention to transfer from JASDAQ to TOPIX - the first such company to do so under the new TSE1 Listing Criteria - with implied desire for future membership in TSE Prime - since the rules went into effect on 1 November 2021. I wrote about that in TOPIX Inclusion Pre-Event for Meiko Electronics (6787) that day.Today, the company announced that it had received approval to move to the TSE1, effective 18 June. That means it will be included in TOPIX at the close of the second-to-last business day of July.More details of this index event below.

Meiko Electronics (6787) Makes It To TOPIX

In this insight, we take a look at the monthly performance of the trading opportunities surrounding TOPIX Index Rebalance events. After a dry spell in March and April, two new Section Transfers were announced in May 2021: <a href="https://www.smartkarma.com/entities/anshin-guarantor-service-co" target="_blank" data-smartkarma-citation="entities:33234:1" rel="noopener">Anshin Guarantor Service (7183 JP)</a> and <a href="https://www.smartkarma.com/entities/nomura-micro-science-co-ltd" target="_blank" data-smartkarma-citation="entities:11317:1" rel="noopener">Nomura Micro Science (6254 JP)</a>. On the other hand, we also witnessed some Inclusion Events resulting from TSE1 Direct Listings: <a href="https://www.smartkarma.com/entities/tess-holdings-co-ltd" target="_blank" data-smartkarma-citation="entities:32979:1" rel="noopener">Tess Holdings Co Ltd (5074 JP)</a> and <a href="https://www.smartkarma.com/entities/kibun-foods-inc" target="_blank" data-smartkarma-citation="entities:33019:1" rel="noopener">Kibun Foods Inc (2933 JP)</a>. Below is a discussion of the situations covered by Quiddity in the Pre-event, Live-event, and Post-event categories during the month of May 2021.

In this insight, we take a look at the monthly performance of the trading opportunities surrounding TOPIX Index Rebalance events. After a dry spell in March and April, two new Section Transfers were announced in May 2021: Anshin Guarantor Service (7183 JP) and Nomura Micro Science (6254 JP). On the other hand, we also witnessed some Inclusion Events resulting from TSE1 Direct Listings: Tess Holdings Co Ltd (5074 JP) and Kibun Foods Inc (2933 JP). Below is a discussion of the situations covered by Quiddity in the Pre-event, Live-event, and Post-event categories during the month of May 2021.   

In January and February 2021 we saw a large wave of TSE1 Section Transfers as many small cap names rushed to get promoted before the new (and more stringent) Section Transfer Requirements were implemented (application deadline November 1, 2020). In contrast, not a single TSE1 Section Transfer was announced in the months of March and April 2021. However, during the month of April, we witnessed TSE's Annual Liquidity Factor Review which caused dozens of stocks to enjoy Index Upweights during the April-end Inclusion Event collectively amount to an estimated upweight size of approximately US$1bn. Below is a look at the performance of the TOPIX-related event trades covered by Quiddity in the Pre-event, Live-event, and Post-event categories during the month of April 2021.

In January and February 2021 we saw a large wave of TSE1 Section Transfers as many small cap names rushed to get promoted before the new (and more stringent) Section Transfer Requirements were implemented (application deadline November 1, 2020). In contrast, not a single TSE1 Section Transfer was announced in the months of March and April 2021. However, during the month of April, we witnessed TSE's Annual Liquidity Factor Review which caused dozens of stocks to enjoy Index Upweights during the April-end Inclusion Event collectively amount to an estimated upweight size of approximately US$1bn. Below is a look at the performance of the TOPIX-related event trades covered by Quiddity in the Pre-event, Live-event, and Post-event categories during the month of April 2021.  

TOPIX Inclusion Trade Summary: April 2021

In January and February we saw a large wave of TSE1 Section Transfers as many small cap names rushed to get promoted before the new (and more stringent) Section Transfer Requirements were implemented. In contrast, not a single TSE1 Section Transfer was announced in the month of March 2021. 
However, this is only the calm before the storm.
In April 2021, we are expecting dozens of companies to enjoy TOPIX Index upweights as a result of the annual liquidity factor review (and this will mean dozens of downweights too). On the other hand, although fewer companies will qualify under the new rules, small-cap companies could use M&amp;A as an alternative route to Section Transfers to meet criteria as discussed below in this insight.
Furthermore, I have discussed the changes to Quiddity's pre-events watchlist and provided performance updates for one "Live" event stock which is expected to have its Inclusion event at the end of April 2021 and 9 "Post" event stocks that completed their Inclusion Events at the end of January 2021 and February 2021.

In January and February we saw a large wave of TSE1 Section Transfers as many small cap names rushed to get promoted before the new (and more stringent) Section Transfer Requirements were implemented. In contrast, not a single TSE1 Section Transfer was announced in the month of March 2021. 
However, this is only the calm before the storm.
In April 2021, we are expecting dozens of companies to enjoy TOPIX Index upweights as a result of the annual liquidity factor review (and this will mean dozens of downweights too). On the other hand, although fewer companies will qualify under the new rules, small-cap companies could use M&amp;A as an alternative route to Section Transfers to meet criteria as discussed below in this insight.
Furthermore, I have discussed the changes to Quiddity's pre-events watchlist and provided performance updates for one "Live" event stock which is expected to have its Inclusion event at the end of April 2021 and 9 "Post" event stocks that completed their Inclusion Events at the end of January 2021 and February 2021. 

Japan

Meiko Electronics Co., Ltd. designs, manufactures, and markets printed circuit boards.  The Company also produces populated boards, board testing devices, and multi-video processors.

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Meiko Electronics (6787 JP)

TOPIX Inclusion Trade Summary: June 2021

TOPIX Pre-Event Watchlist Trades, Announced Trades, and ongoing performance. The announcements have performed well (and did well as pre-events...

Janaghan Jeyakumar, CFA

Meiko Electronics (6787) Makes It To TOPIX

Meiko Electronics (6787) applied in March and will now join TSE1 - the 1st JASDAQ name to do so under the new rules. Since then, we have better...

Travis Lundy

TOPIX Inclusion Trade Summary: May 2021

TOPIX Index Changes Review for May 2021. There are a couple of new names, a list of ongoing pre-event trades, a couple of post-event trades. Things...

Janaghan Jeyakumar, CFA

TOPIX Inclusion Trade Summary: April 2021

April TOPIX Index Events had a great month. Whether it be the single inclusion Rakus (3923), the LF reweight baskets, or the normal TOPIX month-end...

Janaghan Jeyakumar, CFA

TOPIX Inclusion Trade Summary: Mar 2021

The March 2021 TOPIX Index Inclusion Event and Pre-Event Summary, with links to all the greatest hits. The model performed as expected. The best...

Janaghan Jeyakumar, CFA

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