Asia L/S Equity PM/Macro/Thematic Idea Generation

Rikki Malik

Cross Asset Strategy

<ul>
<li>A monthly review of how the markets and our themes are currently performing</li>
<li>Analysing what went wrong and what went right in stocks and sectors</li>
<li>Highlighting positions added or removed from the thematic investment portfolio</li>
</ul>


A monthly review of how the markets and our themes are currently performing
Analysing what went wrong and what went right in stocks and sectors
Highlighting positions added or removed from the thematic investment portfolio


July Themes and Thematic Portfolio Review

Market & Forensics Analyst, Beat the Street

Nimish Maheshwari

Market & Forensics Analyst

Beat the Street

Beat The Street was founded by Nimish Maheshwari and Sudarshan Bhandari, both of whom are Chartered Accountants by Profession, known for their expert analysis in the fields of Business, Sectoral analysis, and Corporate governance.

With a strong social media presence of 45,000+ Subscribers across various platforms, they are considered trusted voices in the industry. Their insights and analysis have been featured in some of India’s most prominent publications, including the Economic Times, Dalal Street Investment Journal, The Morning Context, and The Ken.

Their analysis on Bankrupt & Insolvent companies has been instrumental in saving investors from significant losses. They have a keen eye for identifying red flags and has identified exclusive redflags earlier in Vedanta, Nykaa, Dhani Services, Adani and many more.

Read Business Not Stock Prices

Thematic (Sector/Industry)

<ul>
<li>Nikkei 225 dropped <strong>12.4% on August 5, 2024, amid yen strength and recession fears</strong> in the U.S., triggering circuit breakers.</li>
<li>Economic uncertainties, geopolitical tensions, and interest rate changes are heightening market volatility, impacting global investor sentiment and financial stability.</li>
<li>
<strong>The Yen Carry Trade</strong> has faced turmoil due to rising Japan interest rates, Fed comments on rate cuts, and a weaker-than-expected US job report, leading to substantial market sell-offs.</li>
</ul>


Nikkei 225 dropped 12.4% on August 5, 2024, amid yen strength and recession fears in the U.S., triggering circuit breakers.
Economic uncertainties, geopolitical tensions, and interest rate changes are heightening market volatility, impacting global investor sentiment and financial stability.

The Yen Carry Trade has faced turmoil due to rising Japan interest rates, Fed comments on rate cuts, and a weaker-than-expected US job report, leading to substantial market sell-offs.


Analyzing the Triggers Behind Global Stock Market Sell-Off in Jul-24

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>Up to 12 stocks could be deleted from global passive portfolios in August. The deletion will lead to liquidity events where trackers will need to sell multiple days of ADV.</li>
<li>There has been a buildup of shorts on nearly all these stocks though the extent of the pre-positioning varies.</li>
<li>The increase in shorts is smaller than the estimated passive selling, though there is a fair amount of variability across the names. </li>
</ul>


Up to 12 stocks could be deleted from global passive portfolios in August. The deletion will lead to liquidity events where trackers will need to sell multiple days of ADV.
There has been a buildup of shorts on nearly all these stocks though the extent of the pre-positioning varies.
The increase in shorts is smaller than the estimated passive selling, though there is a fair amount of variability across the names. 


Japan - Passive Selling in a Few Weeks & Shorts Build Up

<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 ended yesterday. There could be three changes at the rebalance with sector balance in focus for the additions.</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>'s capping in the index has been confirmed and its index weight will drop by around 0.9% resulting in big selling at the close on 30 September. </li>
<li>Passive trackers will need to buy between 3.5-35x ADV (2.4%-24% of real float) on the inclusions and sell between 3.7-42.5x ADV on the deletions.</li>
</ul>


The review period for the Nikkei 225 (NKY INDEX) September rebalance ended yesterday. There could be three changes at the rebalance with sector balance in focus for the additions.

Fast Retailing (9983 JP)'s capping in the index has been confirmed and its index weight will drop by around 0.9% resulting in big selling at the close on 30 September. 
Passive trackers will need to buy between 3.5-35x ADV (2.4%-24% of real float) on the inclusions and sell between 3.7-42.5x ADV on the deletions.


Nikkei 225 Index Rebalance Preview (Sep 2024): Review Period Done; Fast Retailing Capping Confirmed

<ul>
<li>Are we witnessing a short-term carry-trade unwind or a trend change?</li>
<li>A short-term bounce in the USDJPY will provide an opportunity to reposition</li>
<li>Industrial metals take the brunt of the unwind in the commodity sector</li>
</ul>


Are we witnessing a short-term carry-trade unwind or a trend change?
A short-term bounce in the USDJPY will provide an opportunity to reposition
Industrial metals take the brunt of the unwind in the commodity sector


Nowhere to Run to Baby, Nowhere to Hide! Part 2

Japan

The Nikkei-225 Stock Average is a price-weighted average of 225 top-rated Japanese companies listed in the First Section of the Tokyo Stock Exchange. The Nikkei Stock Average was first published on May 16, 1949, where the average price was ¥176.21 with a divisor of 225. 

Nikkei 225 (NKY INDEX)

July Themes and Thematic Portfolio Review

We review overall market performance, our investment themes, highlighting additions and substractions in the thematic portfolio.

Rikki Malik

Analyzing the Triggers Behind Global Stock Market Sell-Off in Jul-24

Nikkei 225 plunges 12.4% on August 5, 2024, as yen strength and recession fears trigger circuit breakers, highlighting global market volatility...

Nimish Maheshwari

Japan - Passive Selling in a Few Weeks & Shorts Build Up

There are a bunch of stocks in Japan that could be sold by passive global investors in August. Shorts have increased on nearly all stocks and the...

Brian Freitas

Nikkei 225 Index Rebalance Preview (Sep 2024): Review Period Done; Fast Retailing Capping Confirmed

Review period ended yesterday. Fast Retailing's capping will result in a 0.9% drop in index weight. There could be 3 index changes with sector...

Brian Freitas

Nowhere to Run to Baby, Nowhere to Hide! Part 2

In summary, we expect the unwinding of JPY shorts to continue driving more volatility in markets providing opportunities in certain sectors. The...

Rikki Malik

July Themes and Thematic Portfolio Review

We review overall market performance, our investment themes, highlighting additions and substractions in the thematic portfolio.

Rikki Malik

Analyzing the Triggers Behind Global Stock Market Sell-Off in Jul-24

​Nikkei 225 plunges 12.4% on August 5, 2024, as yen strength and recession fears trigger circuit breakers, highlighting global market volatility...

Nimish Maheshwari

Japan - Passive Selling in a Few Weeks & Shorts Build Up

There are a bunch of stocks in Japan that could be sold by passive global investors in August. Shorts have increased on nearly all stocks and the...

Brian Freitas

Nikkei 225 Index Rebalance Preview (Sep 2024): Review Period Done; Fast Retailing Capping Confirmed

Review period ended yesterday. Fast Retailing's capping will result in a 0.9% drop in index weight. There could be 3 index changes with sector...

Brian Freitas

Nowhere to Run to Baby, Nowhere to Hide! Part 2

In summary, we expect the unwinding of JPY shorts to continue driving more volatility in markets providing opportunities in certain sectors. The...

Rikki Malik

Nikkei 225 plunges 12.4% on August 5, 2024, as yen strength and recession fears trigger circuit breakers, highlighting global market volatility...