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>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

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>Recent developments have continued to reinforce our bullish outlook on global equities (MSCI ACWI).</li>
<li>There is no reason to fight this bullish trend, and we continue to expect more upside into the early part of 2024.</li>
<li>Upgrading Mexico to Overweight; Technology Remains Global Leadership; Actionable Themes: 44 individual stock buy recommendations within Technology, Services, Consumer Discretionary, Financials, and Materials</li>
</ul>


Recent developments have continued to reinforce our bullish outlook on global equities (MSCI ACWI).
There is no reason to fight this bullish trend, and we continue to expect more upside into the early part of 2024.
Upgrading Mexico to Overweight; Technology Remains Global Leadership; Actionable Themes: 44 individual stock buy recommendations within Technology, Services, Consumer Discretionary, Financials, and Materials


Upgrading Mexico to Overweight; Technology Remains Global Leadership; Overall Bullish Outlook Intact

<ul>
<li>There are 38 adds/36 deletes for the JPX Nikkei 400 Index to bring the number of index constituents back to 400. There are stocks with multiple days ADV to trade.</li>
<li>Based on the adds, deletes and capping changes, we estimate one way turnover of 4.35% and a two-way trade of JPY 461bn (US$3.24bn).</li>
<li>There are a few stocks that will have same way flow from other index trackers within a few weeks of the JPX Nikkei 400 Index rebalance.</li>
</ul>


There are 38 adds/36 deletes for the JPX Nikkei 400 Index to bring the number of index constituents back to 400. There are stocks with multiple days ADV to trade.
Based on the adds, deletes and capping changes, we estimate one way turnover of 4.35% and a two-way trade of JPY 461bn (US$3.24bn).
There are a few stocks that will have same way flow from other index trackers within a few weeks of the JPX Nikkei 400 Index rebalance.


JPX Nikkei 400 Index Rebalance: Some Big Impact Names

Equity Analyst, LightStream Research

Shifara Samsudeen, ACMA, CGMA

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

<ul>
<li>Shift reported 3QFY08/2023 results on Friday and the company’s revenues increased 34.2% YoY and OP more than doubled during the quarter. Both revenue and OP beat consensus estimates.</li>
<li>Conclusion of unprofitable projects and expansion into upstream services have helped earnings to expand, and we expect full-year earnings to comfortably beat guidance and consensus estimates.</li>
<li>Shift’s share price moved up by 19% following earnings announcement and has been up more than 39% YTD, and we would recommend holding on as there is further upside.</li>
</ul>


Shift reported 3QFY08/2023 results on Friday and the company’s revenues increased 34.2% YoY and OP more than doubled during the quarter. Both revenue and OP beat consensus estimates.
Conclusion of unprofitable projects and expansion into upstream services have helped earnings to expand, and we expect full-year earnings to comfortably beat guidance and consensus estimates.
Shift’s share price moved up by 19% following earnings announcement and has been up more than 39% YTD, and we would recommend holding on as there is further upside.


High Conviction Shift: Upbeat Quarter, Share Price Up More Than 39% YTD and There’s Further Upside

<ul>
<li>
<a href="https://www.smartkarma.com/entities/shift-inc" target="_blank" data-smartkarma-citation="entities:7266:1" rel="noopener">Shift Inc (3697 JP)</a> reported 2QFY08/23 results on Monday. Revenue increased 34.7% YoY to ¥21.0bn (vs consensus ¥21.3bn vs guidance ¥21.1bn) while OP grew 74.8% YoY to ¥3.3bn (vs consensus ¥2.4bn).</li>
<li>Both GPM and OPM improved significantly reaching record highs as unprofitable projects came to an end with cost optimisation initiatives removing previous concerns over declined margins in 1QFY08/23.</li>
<li>Shift’s share price closed at ¥25,870 closing 15.8% higher than the previous close at the end of yesterday’s trading following its strong set of earnings.</li>
</ul>



Shift Inc (3697 JP) reported 2QFY08/23 results on Monday. Revenue increased 34.7% YoY to ¥21.0bn (vs consensus ¥21.3bn vs guidance ¥21.1bn) while OP grew 74.8% YoY to ¥3.3bn (vs consensus ¥2.4bn).
Both GPM and OPM improved significantly reaching record highs as unprofitable projects came to an end with cost optimisation initiatives removing previous concerns over declined margins in 1QFY08/23.
Shift’s share price closed at ¥25,870 closing 15.8% higher than the previous close at the end of yesterday’s trading following its strong set of earnings.


High Conviction Shift: Margins at Record High with Strict Management and Operational Improvement

Japan

SHIFT Inc. offers information technology outsourcing services. The Company provides outsourcing software testing services to corporations and individual clients. SHIFT also provides software solutions and consulting services, as well as educational classes and programs.

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Shift Inc (3697 JP)

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

Upgrading Mexico to Overweight; Technology Remains Global Leadership; Overall Bullish Outlook Intact

Upgrading Mexico $EWW to Overweight; Bullish Outlook Intact on $ACWI; Technology Remains Global Leadership. 44 individual buys highlighted in Tech,...

Vermilion Research

JPX Nikkei 400 Index Rebalance: Some Big Impact Names

There are 38 adds and 36 deletes for the JPXNK400 Index. The adds have outperformed the deletes and there is a fair bit to trade on a lot of...

Brian Freitas

High Conviction Shift: Margins at Record High with Strict Management and Operational Improvement

Shift will report 3QFY08/2023 earnings end of this week and the company's share price has been up more than 13% YTD, this insight will offer...

Shifara Samsudeen, ACMA, CGMA

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

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

Upgrading Mexico to Overweight; Technology Remains Global Leadership; Overall Bullish Outlook Intact

Upgrading Mexico $EWW to Overweight; Bullish Outlook Intact on $ACWI; Technology Remains Global Leadership. 44 individual buys highlighted in Tech,...

Vermilion Research

JPX Nikkei 400 Index Rebalance: Some Big Impact Names

There are 38 adds and 36 deletes for the JPXNK400 Index. The adds have outperformed the deletes and there is a fair bit to trade on a lot of...

Brian Freitas

High Conviction Shift: Upbeat Quarter, Share Price Up More Than 39% YTD and There’s Further Upside

Shift's 3Q revenues and OP beat consensus and we expect full-year earnings to beat guidance/consensus. Share price has been up more than 39% YTD...

Shifara Samsudeen, ACMA, CGMA

High Conviction Shift: Margins at Record High with Strict Management and Operational Improvement

Shift will report 3QFY08/2023 earnings end of this week and the company's share price has been up more than 13% YTD, this insight will offer...

Shifara Samsudeen, ACMA, CGMA