Korea / Special Sits, Pairs, Index Rebalancing, Clepsydra Capital

Sanghyun Park

Korea / Special Sits, Pairs, Index Rebalancing

Equity Bottom-Up

Samsung's etching gas situation is still very much alive. Chosun put out two reports on this early this morning. To me, these Chosun reports are pretty accurately reflecting the current situation around Samsung and Hynix for etching gas.These are the links of the Chosun reports.<a href="http://biz.chosun.com/site/data/html_dir/2019/08/18/2019081801844.html" target="_blank" rel="noopener">http://biz.chosun.com/site/data/html_dir/2019/08/18/2019081801844.html</a><a href="http://biz.chosun.com/site/data/html_dir/2019/08/18/2019081801846.html" target="_blank" rel="noopener">http://biz.chosun.com/site/data/html_dir/2019/08/18/2019081801846.html</a>In this post, I provide an update on the situation mainly based on these Chosun reports.

Samsung's etching gas situation is still very much alive. Chosun put out two reports on this early this morning. To me, these Chosun reports are pretty accurately reflecting the current situation around Samsung and Hynix for etching gas.These are the links of the Chosun reports.http://biz.chosun.com/site/data/html_dir/2019/08/18/2019081801844.htmlhttp://biz.chosun.com/site/data/html_dir/2019/08/18/2019081801846.htmlIn this post, I provide an update on the situation mainly based on these Chosun reports.

Samsung Etching Gas Situation Still Very Much Alive

Thematic (Sector/Industry)

The whitelist lifting means that Japan is now able to export restrict about 1,200 materials/products to Korea. It is expected that Japan will unveil more details of the next measures on Aug 8. Until then, it's only a guessing game. Even after Aug 8, it is very possible that we won't have any clearer visual on the situation. Probably, this is what the Japanese government wants: creating uncertainties one after another. Nonetheless, we are not short of local speculations about which specific products or materials to be export restricted in the next round. Here are the 4 strong candidates being speculated by local media and industry experts.<ol>
<li>Silicon wafer</li>
<li>Shadow mask (FMM: fine metal mask)</li>
<li>Image sensor</li>
<li>Li-ion battery separator</li>
</ol>

The whitelist lifting means that Japan is now able to export restrict about 1,200 materials/products to Korea. It is expected that Japan will unveil more details of the next measures on Aug 8. Until then, it's only a guessing game. Even after Aug 8, it is very possible that we won't have any clearer visual on the situation. Probably, this is what the Japanese government wants: creating uncertainties one after another. Nonetheless, we are not short of local speculations about which specific products or materials to be export restricted in the next round. Here are the 4 strong candidates being speculated by local media and industry experts.
Silicon wafer
Shadow mask (FMM: fine metal mask)
Image sensor
Li-ion battery separator


Japan's Second Round of Export Restrictions Against Korea: 4 Candidate Products

Samsung LJY made an urgent visit to Japan today. There isn't much information publicly available about his trip schedule. But it'd not be hard to know the purpose of this trip. He's going to meet the Japanese suppliers of those key chemicals to be export restricted by the Japanese government. Then, the question arises again how serious this really is for Samsung. Is it really this much serious as for LJY to go to Japan on Sunday? He even missed the Korea FTC's 5 major chaebols meeting held on this Sunday. He is still awaiting final verdict from the supreme court. He has been walking extremely cautiously on eggshells around the local regulators and the Moon administration ahead of the supreme court's verdict. Missing a meeting held by one of the key local regulators is something unthinkable at this moment. Nonetheless, LJY skipped this meeting and left for Japan.

Samsung LJY made an urgent visit to Japan today. There isn't much information publicly available about his trip schedule. But it'd not be hard to know the purpose of this trip. He's going to meet the Japanese suppliers of those key chemicals to be export restricted by the Japanese government. Then, the question arises again how serious this really is for Samsung. Is it really this much serious as for LJY to go to Japan on Sunday? He even missed the Korea FTC's 5 major chaebols meeting held on this Sunday. He is still awaiting final verdict from the supreme court. He has been walking extremely cautiously on eggshells around the local regulators and the Moon administration ahead of the supreme court's verdict. Missing a meeting held by one of the key local regulators is something unthinkable at this moment. Nonetheless, LJY skipped this meeting and left for Japan.

Samsung LJY Urgently Left for Japan: What's Being Said Inside Samsung

This post lists the companies in both Korea and Japan which are to be affected directly or indirectly by the Abe administration's high tech material export tightening measure that is to be in force one month from now (Aug 1).

This post lists the companies in both Korea and Japan which are to be affected directly or indirectly by the Abe administration's high tech material export tightening measure that is to be in force one month from now (Aug 1).

Japan's HT Materials Export Restriction to Korea: List of Suppliers & Replacements

'Quantamental' Japan Specialist, LightStream Research

Campbell Gunn

'Quantamental' Japan Specialist

ja research

ja research is an independent research platform focused exclusively on Japanese equities. Leveraging data and graphic analysis provided by Japan Analytics, we provide insights on small and medium-sized companies that have been ignored by the sell-side as well as challenging conventional wisdom on larger companies. We also offer analyst and corporate access, the latter with translation if required. 

Quantitative Analysis

<div class="content-caption">
<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/080/728/original/2019-03-02_20-40-55.png?1551526871" class="editor-image img-responsive" data-smartkarma-image-id="80728"></figure>Source: Japan Analytics
</div>LIQUIDITY RULES - Despite the continuous stream of negative macroeconomic news from Japan and other economies, financial liquidity trends are the strongest in over two years, and much of this 'boom' is flowing into risk assets. Large-scale repatriation of offshore funds by US companies has also helped boost the US dollar against the yen. The Market Composite responded by rising 2.3% over the last two weeks, although only by 1% in US dollar terms.WEAK MACRO - Net exports and higher inventories offset private investment and consumption during the fourth quarter, resulting in flat GDP growth year-on-year. January industrial production fell to the lowest level in 30 months, and, with the manufacturing PMI nearing 50, the prospect is for further weakness this quarter. Inventories continue to rise and, in North Asia, to levels last seen in 2005. Combined with the sharp fall in exports in Japan, Korea and Taiwan, export pricing in back in deflationary territory, putting further upward pressure on real interest rates.  Meanwhile, January retail sales saw the largest month-on-month decline in over three years as department stores saw fewer Chinese tourists over the New Year.  Equity markets are living on 'borrowed time'.  <figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/080/722/original/2019-03-02_18-02-59.png?1551517390" class="editor-image img-responsive" data-smartkarma-image-id="80722"></figure><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/080/724/original/2019-03-02_18-07-56.png?1551517689" class="editor-image img-responsive" data-smartkarma-image-id="80724"></figure><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/080/729/original/2019-03-02_20-41-51.png?1551526925" class="editor-image img-responsive" data-smartkarma-image-id="80729"></figure><div class="content-caption">Source: Japan Analytics</div>HOLD FOR NOW - This bear market rally is two months old and is maturing. The Value Traded ratio is below trend again, the RSI is neutral, and the Toraku is signalling caution. We expect another month of liquidity/weak Yen-driven strength before the economic realities begin to prevail.MARKET/SECTOR STRATEGY- We continue to recommend an underweight position in Japan in global portfolios and favour undervalued domestically-orientated companies in the Information Technology, Internet, Media, Transportation, Healthcare and Telecommunications sectors. We would avoid or short the financial sectors Banks, Non-Bank Finance and Multi-Industry. We would underweight the Auto, Retail and Other Consumer Products sectors as consumer spending contracts further in the US, Europe, China and Japan. In the DETAIL section below, we will review Sector performance, company results, revisions and stock performance over the previous two weeks, as well as adding some brief comments on <a href="https://www.smartkarma.com/entities/10020" target="_blank" data-smartkarma-citation="entities:10020:1">Sakai Moving Service (9039 JP)</a>, <a href="https://www.smartkarma.com/entities/20269" target="_blank" data-smartkarma-citation="entities:20269:1">Sumitomo Chemical (4005 JP)</a>, <a href="https://www.smartkarma.com/entities/8431" target="_blank" data-smartkarma-citation="entities:8431:1">Parco (8251 JP)</a>, <a href="https://www.smartkarma.com/entities/4489" target="_blank" data-smartkarma-citation="entities:4489:1">Chugai Pharmaceutical (4519 JP)</a>, <a href="https://www.smartkarma.com/entities/14674" target="_blank" data-smartkarma-citation="entities:14674:1">Nichias (5393 JP)</a>, <a href="https://www.smartkarma.com/entities/27043" target="_blank" data-smartkarma-citation="entities:27043:1">Raksul (4384 JP)</a>, <a href="https://www.smartkarma.com/entities/10503" target="_blank" data-smartkarma-citation="entities:10503:1">Daito Trust (1878 JP)</a>, and <a href="https://www.smartkarma.com/entities/14502" target="_blank" data-smartkarma-citation="entities:14502:1">Benefit One (2412 JP)</a>.


Source: Japan Analytics
LIQUIDITY RULES - Despite the continuous stream of negative macroeconomic news from Japan and other economies, financial liquidity trends are the strongest in over two years, and much of this 'boom' is flowing into risk assets. Large-scale repatriation of offshore funds by US companies has also helped boost the US dollar against the yen. The Market Composite responded by rising 2.3% over the last two weeks, although only by 1% in US dollar terms.WEAK MACRO - Net exports and higher inventories offset private investment and consumption during the fourth quarter, resulting in flat GDP growth year-on-year. January industrial production fell to the lowest level in 30 months, and, with the manufacturing PMI nearing 50, the prospect is for further weakness this quarter. Inventories continue to rise and, in North Asia, to levels last seen in 2005. Combined with the sharp fall in exports in Japan, Korea and Taiwan, export pricing in back in deflationary territory, putting further upward pressure on real interest rates.  Meanwhile, January retail sales saw the largest month-on-month decline in over three years as department stores saw fewer Chinese tourists over the New Year.  Equity markets are living on 'borrowed time'.  Source: Japan AnalyticsHOLD FOR NOW - This bear market rally is two months old and is maturing. The Value Traded ratio is below trend again, the RSI is neutral, and the Toraku is signalling caution. We expect another month of liquidity/weak Yen-driven strength before the economic realities begin to prevail.MARKET/SECTOR STRATEGY- We continue to recommend an underweight position in Japan in global portfolios and favour undervalued domestically-orientated companies in the Information Technology, Internet, Media, Transportation, Healthcare and Telecommunications sectors. We would avoid or short the financial sectors Banks, Non-Bank Finance and Multi-Industry. We would underweight the Auto, Retail and Other Consumer Products sectors as consumer spending contracts further in the US, Europe, China and Japan. In the DETAIL section below, we will review Sector performance, company results, revisions and stock performance over the previous two weeks, as well as adding some brief comments on Sakai Moving Service (9039 JP), Sumitomo Chemical (4005 JP), Parco (8251 JP), Chugai Pharmaceutical (4519 JP), Nichias (5393 JP), Raksul (4384 JP), Daito Trust (1878 JP), and Benefit One (2412 JP).   

🇯🇵 Japan • Fortnightly Update - Liquidity Rules

Japan

SUMITOMO CHEMICAL COMPANY, LIMITED manufactures chemical products.  The Company specializes in basic chemicals, petrochemicals, fine chemicals such as photo-resists, pharmaceutical intermediates, and agrochemicals.  Sumitomo Chemical operates manufacturing plants and sales offices worldwide.

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Sumitomo Chemical (4005 JP)

Samsung Etching Gas Situation Still Very Much Alive

Samsung's etching gas situation is still very much alive. Chosun put out two reports on this early this morning. To me, these Chosun reports are...

Sanghyun Park

Japan's Second Round of Export Restrictions Against Korea: 4 Candidate Products

The whitelist lifting means that Japan is now able to export restrict about 1,200 materials/products to Korea. It is expected that Japan will...

Sanghyun Park

Samsung LJY Urgently Left for Japan: What's Being Said Inside Samsung

Samsung LJY made an urgent visit to Japan today. There isn't much information publicly available about his trip schedule. But it'd not be hard to...

Sanghyun Park

Japan's HT Materials Export Restriction to Korea: List of Suppliers & Replacements

This post lists the companies in both Korea and Japan which are to be affected directly or indirectly by the Abe administration's high tech...

Sanghyun Park

🇯🇵 Japan • Fortnightly Update - Liquidity Rules

LIQUIDITY RULES - Despite the continuous stream of negative macroeconomic news from Japan and other economies, financial liquidity trends are the...

Campbell Gunn

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52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)