'Quantamental' Japan Specialist, LightStream Research

Campbell Gunn

'Quantamental' Japan Specialist

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. 

Quantitative Analysis

- MARKET COMPOSITE -<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/079/882/original/2019-02-24_11-07-12.png?1550974089" class="editor-image img-responsive" data-smartkarma-image-id="79882"></figure><div class="content-caption">Source: Japan Analytics</div>ALMOST THREE-MONTH HIGH RECOVERY - The bear market rally is now in its second stage, and the market composite is now 14% above the Christmas Day low. The 'market value'-based percentage above moving averages almost reached a new three-month on Thursday; the stock count version is lagging as usual.<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/079/886/original/2019-02-24_11-32-45.png?1550975583" class="editor-image img-responsive" data-smartkarma-image-id="79886"></figure><div class="content-caption">Source: Japan Analytics</div>STILL SOME UPSIDE - Using the three-month rate of change in this indicator, we are a few weeks away from generating a short-term sell signal, the last such trigger having occurred on 25th October. <hr>- SECTORS - <figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/079/887/original/2019-02-24_11-45-38.png?1550976349" class="editor-image img-responsive" data-smartkarma-image-id="79887"></figure><div style="text-align: left;" class="content-caption">
LEGEND: The 'sparklines' show the three-year trend in the weighted percentage above moving average relative to the Market Composite and the 'STDev' column is a measure of the variability of that relative measure. The table also provides averages for the breaks above and breaks below and the positive and negative crossovers.</div>SECTOR BREAKDOWN - The top six sectors remain domestic and defensive. REITs, Information Technology, Transporation and Utilities continue from our previous review with Restaurants and Healthcare replacing Media and Telecommunications. Equally predictable is the bottom half-dozen - Banks, Non-Bank Finance, Autos, and Metals remain from two weeks ago, with Construction and Retail replacing Chemicals and Other Materials. <hr>- COMPANIES -COMPANY MOVING AVERAGE OUTLIERS - As with the Market Composite and Sectors, the Moving Average Outlier indicator uses a weighted sum of each company's share price relative to its 5-day, 20-day, 60-day, 120-day and 240-day moving averages. 'Extreme' values are weighted sums greater than 100% and less than -100%. We would caution that this indicator is best used for timing shorter-term reversals and, in many cases, higher highs and lower lows will be seen. <div class="content-highlight">
In the DETAIL section below, we highlight the current top and bottom twenty-five large capitalisation outliers, as well as those companies that have seen the most significant positive and negative changes in their outlier percentage in the last two weeks and provide short comments on companies of particular note.
<a href="https://www.smartkarma.com/entities/26181" target="_blank" data-smartkarma-citation="entities:26181:1">PKSHA Technology (3993 JP)</a> is currently the most extreme large capitalisation positive outlier and an excellent example of a -100 to 100 'roundtrip' in under two months. <a href="https://www.smartkarma.com/entities/24540" target="_blank" data-smartkarma-citation="entities:24540:1">SanBio (4592 JP)</a> is, again, the most extreme negative outlier, having topped the 13th January positive outlier list and is another 'round-tripper'. We also add the chart for 'cockroach' stock <a href="https://www.smartkarma.com/entities/8244" target="_blank" data-smartkarma-citation="entities:8244:1">Leopalace21 (8848 JP)</a> which no longer qualifies for inclusion in our tables, having lost 60% of its value in the last two weeks and 79% in less than a year.
</div><div class="content-caption">
<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/079/890/original/2019-02-24_12-58-23.png?1550980729" class="editor-image img-responsive" data-smartkarma-image-id="79890"></figure><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/079/891/original/2019-02-24_12-59-54.png?1550980806" class="editor-image img-responsive" data-smartkarma-image-id="79891"></figure><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/079/892/original/2019-02-24_13-12-58.png?1550981589" class="editor-image img-responsive" data-smartkarma-image-id="79892"></figure>Source: Japan Analytics
</div>

- MARKET COMPOSITE -Source: Japan AnalyticsALMOST THREE-MONTH HIGH RECOVERY - The bear market rally is now in its second stage, and the market composite is now 14% above the Christmas Day low. The 'market value'-based percentage above moving averages almost reached a new three-month on Thursday; the stock count version is lagging as usual.Source: Japan AnalyticsSTILL SOME UPSIDE - Using the three-month rate of change in this indicator, we are a few weeks away from generating a short-term sell signal, the last such trigger having occurred on 25th October. - SECTORS - 
LEGEND: The 'sparklines' show the three-year trend in the weighted percentage above moving average relative to the Market Composite and the 'STDev' column is a measure of the variability of that relative measure. The table also provides averages for the breaks above and breaks below and the positive and negative crossovers.SECTOR BREAKDOWN - The top six sectors remain domestic and defensive. REITs, Information Technology, Transporation and Utilities continue from our previous review with Restaurants and Healthcare replacing Media and Telecommunications. Equally predictable is the bottom half-dozen - Banks, Non-Bank Finance, Autos, and Metals remain from two weeks ago, with Construction and Retail replacing Chemicals and Other Materials. - COMPANIES -COMPANY MOVING AVERAGE OUTLIERS - As with the Market Composite and Sectors, the Moving Average Outlier indicator uses a weighted sum of each company's share price relative to its 5-day, 20-day, 60-day, 120-day and 240-day moving averages. 'Extreme' values are weighted sums greater than 100% and less than -100%. We would caution that this indicator is best used for timing shorter-term reversals and, in many cases, higher highs and lower lows will be seen. 
In the DETAIL section below, we highlight the current top and bottom twenty-five large capitalisation outliers, as well as those companies that have seen the most significant positive and negative changes in their outlier percentage in the last two weeks and provide short comments on companies of particular note.
PKSHA Technology (3993 JP) is currently the most extreme large capitalisation positive outlier and an excellent example of a -100 to 100 'roundtrip' in under two months. SanBio (4592 JP) is, again, the most extreme negative outlier, having topped the 13th January positive outlier list and is another 'round-tripper'. We also add the chart for 'cockroach' stock Leopalace21 (8848 JP) which no longer qualifies for inclusion in our tables, having lost 60% of its value in the last two weeks and 79% in less than a year.

Source: Japan Analytics


🇯🇵 Japan: Moving Average Outliers - PKSHA, SanBio, Goldwin, ZOZO, Drugstores & ASICS

Equity Analyst, LightStream Research

Supun Walpola

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.

Equity Bottom-Up

<a href="https://www.smartkarma.com/entities/22772" target="_blank" data-smartkarma-citation="entities:22772:1">LINE Corp (3938 JP)</a> is one of the top Japanese names in our "Watchlist" of listed companies in Japan and South Korea that are adopting blockchain technologies or have exposure to cryptocurrencies. 
Since being added to the "Watchlist" in May last year (2018), LINE has launched a cryptocurrency, a cryptocurrency exchange, and a blockchain venture fund. In this note, we revisit LINE's blockchain and cryptocurrency plans.
<div class="content-highlight">
In our opinion, potential synergies between LINE’s cryptocurrency business and its other business ventures are quite enticing. LINE could very well lure “millions” of its existing messaging and LINE Pay users to be a part of its blockchain eco-system. 
</div>

LINE Corp (3938 JP) is one of the top Japanese names in our "Watchlist" of listed companies in Japan and South Korea that are adopting blockchain technologies or have exposure to cryptocurrencies. 
Since being added to the "Watchlist" in May last year (2018), LINE has launched a cryptocurrency, a cryptocurrency exchange, and a blockchain venture fund. In this note, we revisit LINE's blockchain and cryptocurrency plans.

In our opinion, potential synergies between LINE’s cryptocurrency business and its other business ventures are quite enticing. LINE could very well lure “millions” of its existing messaging and LINE Pay users to be a part of its blockchain eco-system. 


This Week in Blockchain & Cryptos: Revisiting LINE's Crypto Plans

In our previous note, <a href="https://www.smartkarma.com/insights/monex-group-8698-jp-weak-fundamentals-deter-the-possibility-of-a-further-upside" target="_blank" data-smartkarma-citation="insights:25647">Monex Group (8698 JP): Weak Fundamentals Deter the Possibility of a Further Upside</a>, we suggested that despite the partial resumption of Coincheck's services, further upside for <a href="https://www.smartkarma.com/entities/14211" target="_blank" data-smartkarma-citation="entities:14211:1">Monex Group Inc (8698 JP)</a> is unlikely due to weak cryptocurrency markets.Since then, Monex's share price (which was around JPY500 in mid-November 2018) has fallen to JPY367 as of 8th February 2019. This is only marginally above the pre-acquisition (of Coincheck) price of JPY344 (on 2nd April 2018). In the meantime, <a href="https://www.smartkarma.com/entities/25895" target="_blank" data-smartkarma-citation="entities:25895:1">Bitcoin (XBTUSD CURNCY)</a>  has also fallen from around USD6,000 in mid-November to around USD3,500 at present.<div class="content-highlight">We maintain our previous direction for Monex as we believe that upside is unlikely in the short run unless there is a significant improvement in cryptocurrency market conditions, despite the resumption of most of Coincheck's services and Monex’s share price falling almost to the pre-acquisition (of Coincheck) level.</div>

In our previous note, Monex Group (8698 JP): Weak Fundamentals Deter the Possibility of a Further Upside, we suggested that despite the partial resumption of Coincheck's services, further upside for Monex Group Inc (8698 JP) is unlikely due to weak cryptocurrency markets.Since then, Monex's share price (which was around JPY500 in mid-November 2018) has fallen to JPY367 as of 8th February 2019. This is only marginally above the pre-acquisition (of Coincheck) price of JPY344 (on 2nd April 2018). In the meantime, Bitcoin (XBTUSD CURNCY)  has also fallen from around USD6,000 in mid-November to around USD3,500 at present.We maintain our previous direction for Monex as we believe that upside is unlikely in the short run unless there is a significant improvement in cryptocurrency market conditions, despite the resumption of most of Coincheck's services and Monex’s share price falling almost to the pre-acquisition (of Coincheck) level.

Monex Group (8698 JP): Upside Is Unlikely Due to Weak Cryptocurrency Markets

Pan-Asia Catalysts/Events, Quiddity Advisors

Travis Lundy

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

Yesterday morning, the Nikkei surprised everyone with an <a href="https://asia.nikkei.com/Business/Business-Deals/KDDI-in-talks-for-near-50-stake-in-online-brokerage-Kabu.com" target="_blank">article</a> saying <a href="https://www.smartkarma.com/entities/639" target="_blank" data-smartkarma-citation="entities:639:1">KDDI Corp (9433 JP)</a> was holding negotiations to acquire a stake of up to just under 50% in <a href="https://www.smartkarma.com/entities/17019" target="_blank" data-smartkarma-citation="entities:17019:1">Kabu.Com Securities (8703 JP)</a>, which is the online brokerage entity of <a href="https://www.smartkarma.com/entities/218" target="_blank" data-smartkarma-citation="entities:218:1">Mitsubishi UFJ Financial Group (8306 JP)</a> with 1.1 million customers. Kabu.com shares were bid limit up all day long and closed at ¥462, which is a 10+ year closing high. The idea is not a new one. The mobile telecommunications market in Japan is mature, and one of the few ways Type 1 telecom providers can grow is by adding content through the "pipes." KDDI already has an investment in an online banking 50/50 joint venture with MUFG called Jibun Bank ("My Bank" or "Myself Bank") which it launched in 2008. KDDI <a href="https://www.reuters.com/article/us-kddi-daiwa/japans-kddi-daiwa-sec-tie-up-in-smartphone-asset-management-idUSKBN1FS02K" target="_blank">established</a> a smartphone-based asset management service with <a href="https://www.smartkarma.com/entities/8389" target="_blank" data-smartkarma-citation="entities:8389:1">Daiwa Securities Group (8601 JP)</a> just under a year ago, where KDDI owns 66.6% and Daiwa 33.4%. This was to attract younger customers to savings products accessible through an app in order to make those customers stickier over the long-term. KDDI also bought into <a href="https://www.smartkarma.com/entities/1564" target="_blank" data-smartkarma-citation="entities:1564:1">Lifenet Insurance Co (7157 JP)</a> in 2015 through a capital raise, and is now its largest shareholder at just over 25% (a decent (and recent) presentation of the company is <a href="https://ir.lifenet-seimei.co.jp/en/library/material/main/0/teaserItems1/00/file/lifenet_overview_1812_en_final.pdf" target="_blank">here</a>). About six months ago, KDDI <a href="https://prtimes.jp/main/html/rd/p/000000032.000012138.html" target="_blank">injected ¥6bn</a> (link is Japanese) into Japanese financial services company Finatext to help spark their new service of a ¥0 commission brokerage. I would note that Finatext and partner (now sub) NOWCAST launched an algorithmic personal asset management advisory service using for kabu.com Securities in 2016. Owning a stake in a broker would go a long ways towards providing comprehensive financial services access by smartphone under a KDDI-owned profit umbrella.Is a deal like this feasible? Reasonable? Likely?The two companies' first response was pretty standard. This was the version from KDDI:<ul>
<li>当社は、カブドットコム証券と金融事業においてさまざまな可能性を検討していますが、決まった事柄 はございません. </li>
<li>KDDI is considering various possibilities in financial business with kabu.com Securities, however, there is no determined facts. [a better translation of the Japanese is "however... no decisions have been made"]</li>
</ul>This is pretty standard in Japanese corporate "clarifications." There are, in fact, no 'decisions' unless a board meeting has been convened and put their stamp on it.But the Japanese market will look at a comment like this and figure that where there is smoke there is fire.

Yesterday morning, the Nikkei surprised everyone with an article saying KDDI Corp (9433 JP) was holding negotiations to acquire a stake of up to just under 50% in Kabu.Com Securities (8703 JP), which is the online brokerage entity of Mitsubishi UFJ Financial Group (8306 JP) with 1.1 million customers. Kabu.com shares were bid limit up all day long and closed at ¥462, which is a 10+ year closing high. The idea is not a new one. The mobile telecommunications market in Japan is mature, and one of the few ways Type 1 telecom providers can grow is by adding content through the "pipes." KDDI already has an investment in an online banking 50/50 joint venture with MUFG called Jibun Bank ("My Bank" or "Myself Bank") which it launched in 2008. KDDI established a smartphone-based asset management service with Daiwa Securities Group (8601 JP) just under a year ago, where KDDI owns 66.6% and Daiwa 33.4%. This was to attract younger customers to savings products accessible through an app in order to make those customers stickier over the long-term. KDDI also bought into Lifenet Insurance Co (7157 JP) in 2015 through a capital raise, and is now its largest shareholder at just over 25% (a decent (and recent) presentation of the company is here). About six months ago, KDDI injected ¥6bn (link is Japanese) into Japanese financial services company Finatext to help spark their new service of a ¥0 commission brokerage. I would note that Finatext and partner (now sub) NOWCAST launched an algorithmic personal asset management advisory service using for kabu.com Securities in 2016. Owning a stake in a broker would go a long ways towards providing comprehensive financial services access by smartphone under a KDDI-owned profit umbrella.Is a deal like this feasible? Reasonable? Likely?The two companies' first response was pretty standard. This was the version from KDDI:
当社は、カブドットコム証券と金融事業においてさまざまな可能性を検討していますが、決まった事柄 はございません. 
KDDI is considering various possibilities in financial business with kabu.com Securities, however, there is no determined facts. [a better translation of the Japanese is "however... no decisions have been made"]
This is pretty standard in Japanese corporate "clarifications." There are, in fact, no 'decisions' unless a board meeting has been convened and put their stamp on it.But the Japanese market will look at a comment like this and figure that where there is smoke there is fire.

Thematic (Sector/Industry)

The year 2018 was not the brightest for cryptocurrencies; <a href="https://www.smartkarma.com/entities/25895" target="_blank" data-smartkarma-citation="entities:25895:1">Bitcoin (XBTUSD CURNCY)</a> fell around 70% during 2018 and top altcoins like <a href="https://www.smartkarma.com/entities/25896" target="_blank" data-smartkarma-citation="entities:25896:1">Ethereum (ETH BGN CURNCY)</a>, Ripple and Bitcoin Cash were also down around 80%, 85% and 95% respectively during last year. While it is difficult to pinpoint a single reason for this, a number of factors including, rising security concerns, increased scrutiny, failed institutional support and Bitcoin Cash hash wars have collectively contributed to this bearish sentiment in the cryptocurrency markets last year.
In this note we take a look at several top cryptocurrency and blockchain developments from last year, to see how they would fare going into 2019.
This is a collaborative report between <a href="https://www.smartkarma.com/profiles/342" target="_blank" data-smartkarma-citation="accounts:342">Douglas Kim</a> and myself.

The year 2018 was not the brightest for cryptocurrencies; Bitcoin (XBTUSD CURNCY) fell around 70% during 2018 and top altcoins like Ethereum (ETH BGN CURNCY), Ripple and Bitcoin Cash were also down around 80%, 85% and 95% respectively during last year. While it is difficult to pinpoint a single reason for this, a number of factors including, rising security concerns, increased scrutiny, failed institutional support and Bitcoin Cash hash wars have collectively contributed to this bearish sentiment in the cryptocurrency markets last year.
In this note we take a look at several top cryptocurrency and blockchain developments from last year, to see how they would fare going into 2019.
This is a collaborative report between Douglas Kim and myself. 

This Week in Blockchain & Cryptos: A Bitcoin Reversal; More Red Flags for Bitmain

Japan

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.

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Monex Group Inc (8698 JP)

🇯🇵 Japan: Moving Average Outliers - PKSHA, SanBio, Goldwin, ZOZO, Drugstores & ASICS

- MARKET COMPOSITE -ALMOST THREE-MONTH HIGH RECOVERY - The bear market rally is now in its second stage, and the market composite is now 14% above...

Campbell Gunn

This Week in Blockchain & Cryptos: Revisiting LINE's Crypto Plans

LINE Corp (3938 JP) is one of the top Japanese names in our "Watchlist" of listed companies in Japan and South Korea that are adopting blockchain...

Supun Walpola

Monex Group (8698 JP): Upside Is Unlikely Due to Weak Cryptocurrency Markets

In our previous note, Monex Group (8698 JP): Weak Fundamentals Deter the Possibility of a Further Upside, we suggested that despite the partial...

Supun Walpola

KDDI Deal for Kabu.com (8703 JP) Coming?

Yesterday morning, the Nikkei surprised everyone with an article saying KDDI Corp (9433 JP) was holding negotiations to acquire a stake of up to...

Travis Lundy

This Week in Blockchain & Cryptos: A Bitcoin Reversal; More Red Flags for Bitmain

The year 2018 was not the brightest for cryptocurrencies; Bitcoin (XBTUSD CURNCY) fell around 70% during 2018 and top altcoins like Ethereum (ETH...

Supun Walpola

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