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

<p>Our most bullish stance in Asia has been in Japan, Korea and Taiwan (core Asia) and now starting to see rotation into Hong Kong. Tactically, we are seeing rally exhaustion signs as the SPX chisels out a top at the upper rising wedge range. Asia is showing signs of a tactical peak after a good run as Japan struggles at the top end of its own wedge range, Korea testing a secondary top and Taiwan above 16,000 projection. Buy levels on a minor correction are outlined to increase risk bets for a push into late February.</p>

Our most bullish stance in Asia has been in Japan, Korea and Taiwan (core Asia) and now starting to see rotation into Hong Kong. Tactically, we are seeing rally exhaustion signs as the SPX chisels out a top at the upper rising wedge range. Asia is showing signs of a tactical peak after a good run as Japan struggles at the top end of its own wedge range, Korea testing a secondary top and Taiwan above 16,000 projection. Buy levels on a minor correction are outlined to increase risk bets for a push into late February.

<p>As the USD moves into extreme oversold territory we are on the hunt for short hedges in Asia and present positioning on the short side into strength this week. Japan, Korea and Taiwan have been our core long group but nearing secondary resistance levels. Dip support targets outlined to trade a push high and then prepare for a mid to late January risk draw down that sets the stage a drive higher in February/March.</p>

As the USD moves into extreme oversold territory we are on the hunt for short hedges in Asia and present positioning on the short side into strength this week. Japan, Korea and Taiwan have been our core long group but nearing secondary resistance levels. Dip support targets outlined to trade a push high and then prepare for a mid to late January risk draw down that sets the stage a drive higher in February/March.

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

Brian Freitas

Pan-Asia Index Rebalances/ Events/ Delta One

Thematic (Sector/Industry)

<p style="text-align: justify;">Equity Index Total Return Futures (TRF) offer a listed solution to trade the implied equity repo. Market dislocations earlier this year along with elevated equity index volatility and repricing of future dividend payments opened up trading opportunities for market participants that had the ability to price and trade the entire suite of delta one products.</p><p style="text-align: justify;">Implied equity repo is not very widely traded in Asia but that is changing with the introduction of listed Total Return Futures (TRF) that closely replicate the pay-off of OTC traded Total Return Swaps (TRS). TRFs offer numerous advantages over TRS’ in that they are fully fungible, centrally cleared (mitigates counterparty risk), and portfolio margined (offering margin offsets with other listed products). Japan implied equity repo has been volatile over the last few years partly due to the Bank of Japan’s ETF buying program opening up trading opportunities and attracting a new breed of investors to the TRF product. There has been renewed interest in trading TRFs due to heightened equity market, repo and dividend volatility during the COVID-19 pandemic.</p><p style="text-align: justify;">With LIBOR scheduled to be phased out by December 2021, there is pressure on market participants to migrate positions to a different benchmark. The SGX Nikkei 225 TRF uses MUTAN (Uncollateralised Overnight Call Rate) as the benchmark for the floating rate and is a viable alternative for market participants that are looking to migrate from an OTC product linked to LIBOR to a listed alternative that does not reference LIBOR.</p>

Equity Index Total Return Futures (TRF) offer a listed solution to trade the implied equity repo. Market dislocations earlier this year along with elevated equity index volatility and repricing of future dividend payments opened up trading opportunities for market participants that had the ability to price and trade the entire suite of delta one products.Implied equity repo is not very widely traded in Asia but that is changing with the introduction of listed Total Return Futures (TRF) that closely replicate the pay-off of OTC traded Total Return Swaps (TRS). TRFs offer numerous advantages over TRS’ in that they are fully fungible, centrally cleared (mitigates counterparty risk), and portfolio margined (offering margin offsets with other listed products). Japan implied equity repo has been volatile over the last few years partly due to the Bank of Japan’s ETF buying program opening up trading opportunities and attracting a new breed of investors to the TRF product. There has been renewed interest in trading TRFs due to heightened equity market, repo and dividend volatility during the COVID-19 pandemic.With LIBOR scheduled to be phased out by December 2021, there is pressure on market participants to migrate positions to a different benchmark. The SGX Nikkei 225 TRF uses MUTAN (Uncollateralised Overnight Call Rate) as the benchmark for the floating rate and is a viable alternative for market participants that are looking to migrate from an OTC product linked to LIBOR to a listed alternative that does not reference LIBOR.

SGX Nikkei 225 Total Return Futures: Repo & Dividend Volatility, and LIBOR Phase Out To Drive Growth

Quantitative Analysis

<div><p>The Asia Short Interest weekly looks at moves in market wide short interest and highlights movements in stock specific short interest across Hong Kong, Japan, Korea and Taiwan using the last available data published by the relevant authorities.</p></div><div><p>Hong Kong saw shorts rise on <a href="https://www.smartkarma.com/entities/ping-an-insurance-grp-co-of-china-ltd" target="_blank" data-smartkarma-citation="entities:12880:1" rel="noopener">Ping An Insurance (H) (2318 HK)</a>, <a href="https://www.smartkarma.com/entities/alibaba-group" target="_blank" data-smartkarma-citation="entities:28434:1" rel="noopener">Alibaba Group (9988 HK)</a>, <a href="https://www.smartkarma.com/entities/tencent-holdings-ltd" target="_blank" data-smartkarma-citation="entities:26:1" rel="noopener">Tencent Holdings (700 HK)</a> and <a href="https://www.smartkarma.com/entities/china-petroleum-chemical-h" target="_blank" data-smartkarma-citation="entities:369:1" rel="noopener">China Petroleum &amp; Chemical (386 HK)</a> while there was short covering on <a href="https://www.smartkarma.com/entities/meituan-dianping" target="_blank" data-smartkarma-citation="entities:26970:1" rel="noopener">Meituan (3690 HK)</a>, <a href="https://www.smartkarma.com/entities/great-wall-motor-co-ltd-cb302af9-398c-4d2d-ba39-023e43287eef" target="_blank" data-smartkarma-citation="entities:128:1" rel="noopener">Great Wall Motor (2333 HK)</a>, <a href="https://www.smartkarma.com/entities/kingdee-international-sftwr" target="_blank" data-smartkarma-citation="entities:37:1" rel="noopener">Kingdee International Software (268 HK)</a> and <a href="https://www.smartkarma.com/entities/anta-sports-products-ltd" target="_blank" data-smartkarma-citation="entities:10261:1" rel="noopener">Anta Sports Products (2020 HK)</a>. Shorts increased in Financials, Communication Services, Health Care and Energy, and decreased on Information Technology names.</p></div><div><p>In Japan, stocks that saw the most shorts were <a href="https://www.smartkarma.com/entities/recruit-holdings-co-ltd" target="_blank" data-smartkarma-citation="entities:15070:1" rel="noopener">Recruit Holdings (6098 JP)</a>, <a href="https://www.smartkarma.com/entities/tokyo-electron-ltd" target="_blank" data-smartkarma-citation="entities:280:1" rel="noopener">Tokyo Electron (8035 JP)</a>, <a href="https://www.smartkarma.com/entities/sharp-corp" target="_blank" data-smartkarma-citation="entities:391:1" rel="noopener">Sharp Corp (6753 JP)</a> and <a href="https://www.smartkarma.com/entities/capcom-co-ltd" target="_blank" data-smartkarma-citation="entities:1459:1" rel="noopener">Capcom Co Ltd (9697 JP)</a> while shorts decreased on <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>, <a href="https://www.smartkarma.com/entities/kawasaki-heavy-industries" target="_blank" data-smartkarma-citation="entities:8790:1" rel="noopener">Kawasaki Heavy Industries (7012 JP)</a>, <a href="https://www.smartkarma.com/entities/canon-inc" target="_blank" data-smartkarma-citation="entities:1:1" rel="noopener">Canon Inc (7751 JP)</a> and <a href="https://www.smartkarma.com/entities/cyberagent-inc" target="_blank" data-smartkarma-citation="entities:8197:1" rel="noopener">CyberAgent Inc (4751 JP)</a>. Sectorally, shorts increased on Information Technology names and decreased in the Consumer Discretionary, Materials, Health Care and Financials sectors.</p></div><div><p>In Korea, there was large short covering on <a href="https://www.smartkarma.com/entities/celltrion-inc" target="_blank" data-smartkarma-citation="entities:991:1" rel="noopener">Celltrion Inc (068270 KS)</a>, <a href="https://www.smartkarma.com/entities/samsung-electronics-co-ltd" target="_blank" data-smartkarma-citation="entities:191:1" rel="noopener">Samsung Electronics (005930 KS)</a>, <a href="https://www.smartkarma.com/entities/samsung-sdi-co-ltd" target="_blank" data-smartkarma-citation="entities:503:1" rel="noopener">Samsung SDI (006400 KS)</a> and <a href="https://www.smartkarma.com/entities/samsung-electro-mechanics-co" target="_blank" data-smartkarma-citation="entities:539:1" rel="noopener">Samsung Electro Mechanics Co, Ltd. (009150 KS)</a>. </p></div><div><p>Stocks in Taiwan that saw the highest increase in shorts were <a href="https://www.smartkarma.com/entities/au-optronics-corp" target="_blank" data-smartkarma-citation="entities:6704:1" rel="noopener">Au Optronics (2409 TT)</a>, <a href="https://www.smartkarma.com/entities/delta-electronics-inc" target="_blank" data-smartkarma-citation="entities:12688:1" rel="noopener">Delta Electronics (2308 TT)</a>, <a href="https://www.smartkarma.com/entities/largan-precision-co-ltd" target="_blank" data-smartkarma-citation="entities:9126:1" rel="noopener">Largan Precision (3008 TT)</a> and <a href="https://www.smartkarma.com/entities/nanya-technology-corp" target="_blank" data-smartkarma-citation="entities:3269:1" rel="noopener">Nanya Technology (2408 TT)</a> while shorts were covered on <a href="https://www.smartkarma.com/entities/taiwan-semiconductor-manufacturing-company" target="_blank" data-smartkarma-citation="entities:11230:1" rel="noopener">TSMC (2330 TT)</a>, <a href="https://www.smartkarma.com/entities/taiwan-cement" target="_blank" data-smartkarma-citation="entities:19736:1" rel="noopener">Taiwan Cement (1101 TT)</a>, <a href="https://www.smartkarma.com/entities/mediatek-inc" target="_blank" data-smartkarma-citation="entities:772:1" rel="noopener">Mediatek Inc (2454 TT)</a> and <a href="https://www.smartkarma.com/entities/macronix-international" target="_blank" data-smartkarma-citation="entities:3247:1" rel="noopener">Macronix International (2337 TT)</a>. </p></div>

The Asia Short Interest weekly looks at moves in market wide short interest and highlights movements in stock specific short interest across Hong Kong, Japan, Korea and Taiwan using the last available data published by the relevant authorities.Hong Kong saw shorts rise on Ping An Insurance (H) (2318 HK), Alibaba Group (9988 HK), Tencent Holdings (700 HK) and China Petroleum &amp; Chemical (386 HK) while there was short covering on Meituan (3690 HK), Great Wall Motor (2333 HK), Kingdee International Software (268 HK) and Anta Sports Products (2020 HK). Shorts increased in Financials, Communication Services, Health Care and Energy, and decreased on Information Technology names.In Japan, stocks that saw the most shorts were Recruit Holdings (6098 JP), Tokyo Electron (8035 JP), Sharp Corp (6753 JP) and Capcom Co Ltd (9697 JP) while shorts decreased on Fast Retailing (9983 JP), Kawasaki Heavy Industries (7012 JP), Canon Inc (7751 JP) and CyberAgent Inc (4751 JP). Sectorally, shorts increased on Information Technology names and decreased in the Consumer Discretionary, Materials, Health Care and Financials sectors.In Korea, there was large short covering on Celltrion Inc (068270 KS), Samsung Electronics (005930 KS), Samsung SDI (006400 KS) and Samsung Electro Mechanics Co, Ltd. (009150 KS). Stocks in Taiwan that saw the highest increase in shorts were Au Optronics (2409 TT), Delta Electronics (2308 TT), Largan Precision (3008 TT) and Nanya Technology (2408 TT) while shorts were covered on TSMC (2330 TT), Taiwan Cement (1101 TT), Mediatek Inc (2454 TT) and Macronix International (2337 TT). 

Asia Short Interest: Sinopec, Kingdee, Anta, Recruit, Capcom, Sharp, Celltrion, Samsung, Delta, TSMC

'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.

<section class="figure"><section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/175/629/original/2020-12-01_06-32-57.png?1606771992" class="editor-image img-responsive" data-smartkarma-image-id="175629"></figure></section><p><strong>FOUR QUADRANTS </strong>- By combining our two scoring methodologies - the Relative Price Score (RPS) and the Results &amp; Revision Score (RRS), we can assign companies into four quadrants:-</p></section><div><ul style="list-style-type: disc;">
<li>
<strong>CONTRARIAN BUYS </strong>- Low Results &amp; Revision and Relative Price Scores</li>
<li>
<strong>CONTRARIAN SELLS </strong>- High Results &amp; Revision and Relative Price Scores</li>
<li>
<strong>TURNAROUND BUYS </strong>- High Results &amp; Revision Scores &amp; low Relative Price Scores</li>
<li>
<strong>EX-GROWTH</strong><strong>SELLS</strong> - Low Results &amp; Revision Scores &amp; high Relative Price Scores</li>
</ul></div><div>
<p>Turnaround Buys are quite rare but tend to offer reasonable upside for relatively low risk. Examples from 2020 include <a href="https://www.smartkarma.com/entities/lixil-group-corp" target="_blank" data-smartkarma-citation="entities:454:1" rel="noopener">Lixil (5938 JP)</a> and <a href="https://www.smartkarma.com/entities/nec-corp" target="_blank" data-smartkarma-citation="entities:17084:1" rel="noopener">NEC (6701 JP)</a>.</p>
<section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/175/110/original/2020-11-30_09-39-21.png?1606696981" class="editor-image img-responsive" data-smartkarma-image-id="175110"></figure></section><section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/175/111/original/2020-11-30_09-43-17.png?1606697029" class="editor-image img-responsive" data-smartkarma-image-id="175111"></figure></section><p><strong><a href="https://www.dropbox.com/s/7b61jl02dh0pzno/2020-11-25_12-43-55.png?dl=0" target="_blank" rel="noopener">TURNAROUND BUYS</a> -</strong> In the<strong> DETAIL </strong>section below, we shall review the current 'crop' of Turnaround Buys. The last Insight in this mini-series will look at Ex-Growth Sells before concluding with one '2021 High Conviction' recommendation. The first two Insights in the Series can be found at - <a href="https://www.smartkarma.com/insights/japan-four-quadrants-contrarian-buys" target="_blank" data-smartkarma-citation="insights:45688" rel="noopener">Contrarian Buys </a>and <a href="https://www.smartkarma.com/insights/japan-four-quadrants-contrarian-sells" target="_blank" data-smartkarma-citation="insights:45725" rel="noopener">Contrarian Sells</a>.  </p>
</div>

FOUR QUADRANTS - By combining our two scoring methodologies - the Relative Price Score (RPS) and the Results &amp; Revision Score (RRS), we can assign companies into four quadrants:-

CONTRARIAN BUYS - Low Results &amp; Revision and Relative Price Scores

CONTRARIAN SELLS - High Results &amp; Revision and Relative Price Scores

TURNAROUND BUYS - High Results &amp; Revision Scores &amp; low Relative Price Scores

EX-GROWTHSELLS - Low Results &amp; Revision Scores &amp; high Relative Price Scores

Turnaround Buys are quite rare but tend to offer reasonable upside for relatively low risk. Examples from 2020 include Lixil (5938 JP) and NEC (6701 JP).
TURNAROUND BUYS - In the DETAIL section below, we shall review the current 'crop' of Turnaround Buys. The last Insight in this mini-series will look at Ex-Growth Sells before concluding with one '2021 High Conviction' recommendation. The first two Insights in the Series can be found at - Contrarian Buys and Contrarian Sells.  


🇯🇵 JAPAN • Four Quadrants - Turnaround Buys

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)

Core Asia Buy Targets

Our most bullish stance in Asia has been in core Asia. Tactically, we are seeing rally exhaustion signs. Take profit and protection levels noted...

Thomas Schroeder

Asia Long and Short 2021 Kick Off

As the USD moves into oversold territory we are on the hunt for short hedges in Asia and present short positions into strength this week. Core Asia...

Thomas Schroeder

SGX Nikkei 225 Total Return Futures: Repo & Dividend Volatility, and LIBOR Phase Out To Drive Growth

With LIBOR scheduled to be phased out by December 2021, the SGX Nikkei 225 Total Return Futures provide a high quality alternative to access Japan...

Brian Freitas

Asia Short Interest: Sinopec, Kingdee, Anta, Recruit, Capcom, Sharp, Celltrion, Samsung, Delta, TSMC

The Short Interest report looks at large weekly movements across HK, Japan, Korea and Taiwan. Ping An saw a huge increase in shorts while TSMC saw...

Brian Freitas

🇯🇵 JAPAN • Four Quadrants - Turnaround Buys

Turnaround Buys are quite rare but tend to offer reasonable upside for relatively low risk. Examples from 2020 include Lixil (5938 JP) and NEC...

Campbell Gunn