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

NTT (Nippon Telegraph & Telephone) / Event-Driven

<ul>
<li>On 7 April, the JPX announced the changes to the Free Float Weights (FFW) for the TOPIX Index. There are some big changes due to the updated FFW methodology.</li>
<li>From April to June, we see a one-way turnover of 2.87% and a one-way trade of ¥2,285bn. Some stocks have opposite way flows in different months.</li>
<li>Stocks with inflows outperformed stocks with outflows from Oct-Dec 2021 before giving up all the gains. These stocks have started to outperform and could continue outperforming over the next quarter.</li>
</ul>


On 7 April, the JPX announced the changes to the Free Float Weights (FFW) for the TOPIX Index. There are some big changes due to the updated FFW methodology.
From April to June, we see a one-way turnover of 2.87% and a one-way trade of ¥2,285bn. Some stocks have opposite way flows in different months.
Stocks with inflows outperformed stocks with outflows from Oct-Dec 2021 before giving up all the gains. These stocks have started to outperform and could continue outperforming over the next quarter.


TOPIX FFW Transition - Big Flows from April to June

Pan-Asia Catalysts/Events, Quiddity Advisors

Travis Lundy

Pan-Asia Catalysts/Events

Quiddity Advisors

<ul>
<li>The TSE launched its new cash equity market structure earlier this week. The TOPIX Index changes include a one-off FFW Methodology Review, where results were announced today. </li>
<li>The changes announced today go part-way to fixing float issues, but there will be follow-on changes in October, and one should expect companies to react with share cancellations.</li>
<li>The big gainer in this TOPIX rebal is <a href="https://www.smartkarma.com/entities/nippon-telegraph-telephone-corporation" target="_blank" data-smartkarma-citation="entities:623:1" rel="noopener">NTT (Nippon Telegraph &amp; Telephone) (9432 JP)</a>. There are a fair number of "losers." The 3-month total trade is about ¥2.3trln one-way.</li>
</ul>


The TSE launched its new cash equity market structure earlier this week. The TOPIX Index changes include a one-off FFW Methodology Review, where results were announced today. 
The changes announced today go part-way to fixing float issues, but there will be follow-on changes in October, and one should expect companies to react with share cancellations.
The big gainer in this TOPIX rebal is NTT (Nippon Telegraph &amp; Telephone) (9432 JP). There are a fair number of "losers." The 3-month total trade is about ¥2.3trln one-way.


The BIGLY TOPIX April 2022 Rebalance - $20bn One-Way Split Over 3 Months

Technical Analyst, Vermilion Research

Joe Jasper

Technical Analyst

Technical and Quantitative Research

Vermilion Research

Vermilion’s objective is to deliver timely, actionable, and unique technical research to professional investors through the application of our various technical indicators.

Our research strategists seek to highlight securities which we believe are at major inflection points, based on our various technical and quantitative indicators, and offer asymmetric risk/return profiles. Our unique research methodology, centered on relative strength, enables our strategists to deliver superior investment recommendations.

Our process begins by organizing the universe of actively traded stocks into discrete sectors, then into industry groups. We then apply our technical and quantitative tools to identify developing price trends. Once attractive trends are identified within a selected sector or group, we screen for individual stocks which we believe offer the best risk/reward profile. We provide a historical perspective that often reveals, through our long-term charts, how price patterns often repeat themselves over time.

Technical Analysis

<ul>
<li>The lows have likely been established for this correction, but a bottoming process would likely take weeks or potentially months and could come with more tests of the lows.</li>
<li>Japan's TOPIX and Nikkei 225 are each testing their respective downtrends. The EURO STOXX 50 is testing resistance in the 4040-4090 range. Germany's DAX is testing major resistance at 14,815-14,950.</li>
<li>It is likely that this initial 2-3 week bounce has run its course; stick with cyclical value and defensives, areas we have been focused on for most of 2022.</li>
</ul>


The lows have likely been established for this correction, but a bottoming process would likely take weeks or potentially months and could come with more tests of the lows.
Japan's TOPIX and Nikkei 225 are each testing their respective downtrends. The EURO STOXX 50 is testing resistance in the 4040-4090 range. Germany's DAX is testing major resistance at 14,815-14,950.
It is likely that this initial 2-3 week bounce has run its course; stick with cyclical value and defensives, areas we have been focused on for most of 2022.


Sticking With Cyclical Value and Defensives; Adding Large-Cap Japan Technology

Telco/Internet specialist

Kirk Boodry

Redex Research

Equity Bottom-Up

NTT (Nippon Telegraph & Telephone) / Equity Bottom-Up

<ul>
<li>
<a href="https://www.smartkarma.com/entities/jtower-inc" target="_blank" data-smartkarma-citation="entities:31042:1" rel="noopener">JTower (4485 JP)</a> has signed a deal to buy 6,002 DoCoMo towers for ¥106bn validating its long term growth potential and its central position as Japan's infrastructure-sharing company</li>
<li>The headline numbers are maximums and could take years to realize as JTower grows to the scale required</li>
<li>Conversely it is not a large deal for DoCoMo but the first mobile tower sale/leaseback transaction in Japan highlights an industry shift towards more efficient capital deployment</li>
</ul>



JTower (4485 JP) has signed a deal to buy 6,002 DoCoMo towers for ¥106bn validating its long term growth potential and its central position as Japan's infrastructure-sharing company
The headline numbers are maximums and could take years to realize as JTower grows to the scale required
Conversely it is not a large deal for DoCoMo but the first mobile tower sale/leaseback transaction in Japan highlights an industry shift towards more efficient capital deployment


JTower Inc - DoCoMo Tower Agreement Is a Milestone

<ul>
<li>The core eCommerce and Fintech segments posted good results for the quarter but that will certainly get lost in the discussion on mobile</li>
<li>Mobile operating losses exceeded $1bn in Q4 and whilst management is guiding to losses bottoming out in Q1 22, the magnitude of improvements remains undefined</li>
<li>Rakuten Mobile capex is on par with incumbents and will remain unchanged in FY22</li>
</ul>


The core eCommerce and Fintech segments posted good results for the quarter but that will certainly get lost in the discussion on mobile
Mobile operating losses exceeded $1bn in Q4 and whilst management is guiding to losses bottoming out in Q1 22, the magnitude of improvements remains undefined
Rakuten Mobile capex is on par with incumbents and will remain unchanged in FY22


Rakuten (Neutral) - Q4 21 Results Reaction: Hard to Look past Mobile Losses

Japan

Nippon Telegraph and Telephone Corporation provides a variety of telecommunication services, including telephone, telegraph, leased circuits, data communication, terminal equipment sales, and related services. The Company provides both local and long distance telephone services within Japan.

NTT (Nippon Telegraph & Telephone) (9432 JP)

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NTT (Nippon Telegraph & Telephone) (9432 JP)

TOPIX FFW Transition - Big Flows from April to June

Changes to the Topix FFW methodology will result in a turnover of 2.87% & trade of ¥2,285bn from April to June. There is a lot to trade on some...

Brian Freitas

The BIGLY TOPIX April 2022 Rebalance - $20bn One-Way Split Over 3 Months

The BIG TOPIX April 2022 Rebalance. Concurrent with the move to new structure, the TSE changed the FFW methodology to exclude cross-holdings. The...

Travis Lundy

Sticking With Cyclical Value and Defensives; Adding Large-Cap Japan Technology

Sticking With Cyclical Value & Defensives; Adding Large-Cap Japan Technology. 2-3 week bounce has likely run its course with $TOPIX $Nikkei 225,...

Vermilion Research

JTower Inc - DoCoMo Tower Agreement Is a Milestone

Japan is a latecomer to infrastructure sharing but DoCoMo's tower sale to JTower changes that. Considering the latter's scale, this could take a...

Kirk Boodry

Rakuten (Neutral) - Q4 21 Results Reaction: Hard to Look past Mobile Losses

Rakuten’s mobile business is losing a billion dollars per quarter and capital spending is higher than incumbents. That is going to obscure solid...

Kirk Boodry

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