Pan-Asia Index Rebalances/ Events/ Delta One, Periscope Analytics

Brian Freitas

Pan-Asia Index Rebalances/ Events/ Delta One

Event-Driven

In May, the Nikkei released a market consultation on proposed changes to 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> covering capping the weight of new constituents in the index at 1% by using a Price Adjustment Factor, limiting the number of index changes at a periodic review to 3, and changing the index universe from stocks listed on TSE's 1st section to stocks that are listed on the Prime Market (post the reorganisation). Most of the proposed changes were subsequently approved.This is the first <a href="https://www.smartkarma.com/entities/nikkei-225" target="_blank" data-smartkarma-citation="entities:22909:1" rel="noopener">Nikkei 225 (NKY INDEX)</a> rebalance after the market consultation that tweaked things around. The tweaks could ensure the inclusion of stocks that were historically not included in the index due to their high stock price, though the impact will be much smaller since their weight in the index will not exceed 1%.At the upcoming rebalance, we see a high probability of <a href="https://www.smartkarma.com/entities/nintendo-co-ltd" target="_blank" data-smartkarma-citation="entities:5415:1" rel="noopener">Nintendo Co Ltd (7974 JP)</a> and <a href="https://www.smartkarma.com/entities/zozo-inc" target="_blank" data-smartkarma-citation="entities:18379:1" rel="noopener">ZOZO Inc (3092 JP)</a> being included in the index while there is a lower probability of <a href="https://www.smartkarma.com/entities/oriental-land-co-ltd" target="_blank" data-smartkarma-citation="entities:13517:1" rel="noopener">Oriental Land (4661 JP)</a> and <a href="https://www.smartkarma.com/entities/orix-corp" target="_blank" data-smartkarma-citation="entities:9936:1" rel="noopener">Orix Corp (8591 JP)</a> being included.Potential deletion candidates are <a href="https://www.smartkarma.com/entities/toho-zinc-co-ltd" target="_blank" data-smartkarma-citation="entities:2796:1" rel="noopener">Toho Zinc (5707 JP)</a>, <a href="https://www.smartkarma.com/entities/sky-perfect-jsat-holdings" target="_blank" data-smartkarma-citation="entities:14097:1" rel="noopener">Sky Perfect Jsat (9412 JP)</a>, <a href="https://www.smartkarma.com/entities/maruha-nichiro-corp" target="_blank" data-smartkarma-citation="entities:20640:1" rel="noopener">Maruha Nichiro (1333 JP)</a> and <a href="https://www.smartkarma.com/entities/pacific-metals-co-ltd" target="_blank" data-smartkarma-citation="entities:3439:1" rel="noopener">Pacific Metals (5541 JP)</a>.There will be quite a large impact from passive trading on a few names.The changes will be announced early September and will be implemented at the close of trading on 30 September.

In May, the Nikkei released a market consultation on proposed changes to the Nikkei 225 (NKY INDEX) covering capping the weight of new constituents in the index at 1% by using a Price Adjustment Factor, limiting the number of index changes at a periodic review to 3, and changing the index universe from stocks listed on TSE's 1st section to stocks that are listed on the Prime Market (post the reorganisation). Most of the proposed changes were subsequently approved.This is the first Nikkei 225 (NKY INDEX) rebalance after the market consultation that tweaked things around. The tweaks could ensure the inclusion of stocks that were historically not included in the index due to their high stock price, though the impact will be much smaller since their weight in the index will not exceed 1%.At the upcoming rebalance, we see a high probability of Nintendo Co Ltd (7974 JP) and ZOZO Inc (3092 JP) being included in the index while there is a lower probability of Oriental Land (4661 JP) and Orix Corp (8591 JP) being included.Potential deletion candidates are Toho Zinc (5707 JP), Sky Perfect Jsat (9412 JP), Maruha Nichiro (1333 JP) and Pacific Metals (5541 JP).There will be quite a large impact from passive trading on a few names.The changes will be announced early September and will be implemented at the close of trading on 30 September.

Nikkei225 Index Rebalance Preview: Perennial Favourites Could Be In

Chart based progressive global trading strategies, Chart Partners

Thomas Schroeder

Chart based progressive global trading strategies

Chart Partners

Chart Partners objective is to discover medium-term cycle turns and profit opportunities before they unfold, within structural trends while preserving capital with clear degrees of risk. We have real return ideas. 

Markets are dynamic and trading systems must reflect this. It is crucial to determine underlying correlations and lead-lag relationships within global markets and the impact on linked instruments. Our weekly Chartonics product gives you short-term trading strategies that can be applied within the medium and longer term macro trends that are mapped out in our strategy updates. 

Our methodology fuses global market variables and isolates drivers in trends. We specialize in FX, index trade in NY and Asia with a focus on Asian stocks. 

Technical Analysis

Korea Stock Exchange KOSPI 200 / Technical Analysis

As China/HK and Japan reach for oversold cycle lows, our attention shifts to Korea and Taiwan as short rotation candidates as both have backed of of key resistance zones and vulnerable into an exhaustive US rally cycle.Nikkei lower wedge support remains our ideal downside target. HSI undershoot to 24,600 but 27,000 is now formidable resistance.Korea and Taiwan are closer to key has and backing off of resistance zones, making them more vulnerable to an exhaustive NDX cycle.<div><div>Key takeaway - Nikkei and HSI expected to outperform Korea and Taiwan from noted low zones after the next leg down is complete.</div></div>

As China/HK and Japan reach for oversold cycle lows, our attention shifts to Korea and Taiwan as short rotation candidates as both have backed of of key resistance zones and vulnerable into an exhaustive US rally cycle.Nikkei lower wedge support remains our ideal downside target. HSI undershoot to 24,600 but 27,000 is now formidable resistance.Korea and Taiwan are closer to key has and backing off of resistance zones, making them more vulnerable to an exhaustive NDX cycle.Key takeaway - Nikkei and HSI expected to outperform Korea and Taiwan from noted low zones after the next leg down is complete.

Asia market long ideas into weakness are challenging with short themes dominating in Japan, HK and Korea (next to buckle). ASX banks tops our long list followed by bottom digging in HK tech. Taiwan is resting on bull/bear support.A clear bear lean is noted in Asia and parts of Europe compared to the US powerhouse upcycle that is near a tactical topping zone. Our cycle work calls for a ST US top today/Monday for a dip and then upside re test in late July with August seasonality turning bearish. Asia will front run a US top.

Asia market long ideas into weakness are challenging with short themes dominating in Japan, HK and Korea (next to buckle). ASX banks tops our long list followed by bottom digging in HK tech. Taiwan is resting on bull/bear support.A clear bear lean is noted in Asia and parts of Europe compared to the US powerhouse upcycle that is near a tactical topping zone. Our cycle work calls for a ST US top today/Monday for a dip and then upside re test in late July with August seasonality turning bearish. Asia will front run a US top.

<a href="https://www.smartkarma.com/entities/nikkei-225" target="_blank" data-smartkarma-citation="entities:22909:1" rel="noopener">Nikkei 225 (NKY INDEX)</a> remains on the backfoot with lower highs and lower lows in line with our short tranches that began at 30,100, 29,300 and more recently at 28,800 resistance. Our washout target remains at 27,000 with lower wedge support the ideal buy zone near 26,300 but would take an SPX wobble in August to achieve.The ongoing bull wedge is due to mature.A minor new index low and a non confirmation in the MACD (no new low) would form bull divergence and the setup for a fresh macro rally phase.Macro favors buying new lows in coming weeks.

Nikkei 225 (NKY INDEX) remains on the backfoot with lower highs and lower lows in line with our short tranches that began at 30,100, 29,300 and more recently at 28,800 resistance. Our washout target remains at 27,000 with lower wedge support the ideal buy zone near 26,300 but would take an SPX wobble in August to achieve.The ongoing bull wedge is due to mature.A minor new index low and a non confirmation in the MACD (no new low) would form bull divergence and the setup for a fresh macro rally phase.Macro favors buying new lows in coming weeks.

Founder & Chief Market Strategist - SAV Markets, SAV Markets

Shyam Devani

Founder & Chief Market Strategist - SAV Markets

The picture unfolding on the Nikkei 225 since February generally warned of a mean reverting move down to the 200-day moving average. Now that target has been met, we see a decent setup emerging that argues for a rally not only to the February high but also beyond.

The picture unfolding on the Nikkei 225 since February generally warned of a mean reverting move down to the 200-day moving average. Now that target has been met, we see a decent setup emerging that argues for a rally not only to the February high but also beyond.

Nikkei 225: Target Met, Now Time for a Rally

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)

Nikkei225 Index Rebalance Preview: Perennial Favourites Could Be In

Nintendo could be included in the NKY at the upcoming rebalance though the impact will not be very large. The new methodology could also result in...

Brian Freitas

Asia Short Rotation

As China/HK and Japan reach for oversold cycle lows, our attention shifts to Korea and Taiwan as short rotation candidates as both have backed of...

Thomas Schroeder

Asia Long/Short Trades

Asia market short themes dominating in Japan, HK and Korea (next to buckle). ASX banks tops our long list followed by bottom digging in HK tech....

Thomas Schroeder

Nikkei Short Update/Macro Long Entry

Nikkei 225 (NKY INDEX) remains on the backfoot with lower highs and lower lows in line with our short tranches. Our target remains at 27,000 with...

Thomas Schroeder

Nikkei 225: Target Met, Now Time for a Rally

The downside target on the Nikkei 225 has been met., Now we are forming a bullish pattern that could argue for new trend highs.

Shyam Devani