Asia L/S Equity PM/Macro/Thematic Idea Generation

Rikki Malik

Cross Asset Strategy

<ul>
<li>JPY sensitive names and foreigner favourites are unlikely to be the next driver of the market.</li>
<li>Sectors not dependent on a weak Japanese Yen are more likely to be the next winners</li>
<li>While individual stocks will still benefit from corporate governance reforms, a rising tide will not lift all boats as it has done over the last 18 months</li>
</ul>


JPY sensitive names and foreigner favourites are unlikely to be the next driver of the market.
Sectors not dependent on a weak Japanese Yen are more likely to be the next winners
While individual stocks will still benefit from corporate governance reforms, a rising tide will not lift all boats as it has done over the last 18 months


Sectors to Look at for the Japanese Stockmarket's Next Phase

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>
<a href="https://www.smartkarma.com/entities/kokusai-electric-corp" target="_blank" data-smartkarma-citation="entities:40152:1" rel="noopener">Kokusai Electric (6525 JP)</a> could price their secondary offering after market close today. The stock is down 10.5% since the rumors of the placement began 7 trading sessions ago.</li>
<li>The <a href="https://www.smartkarma.com/entities/philadelphia-stock-exchange-semiconductor-index" target="_blank" data-smartkarma-citation="entities:32992:1" rel="noopener">Philadelphia Stock Exchange Semiconductor Index (SOX INDEX)</a> has been dropping over the last few days and is 8.6% lower over the last 8 trading days.</li>
<li>
<a href="https://www.smartkarma.com/entities/kokusai-electric-corp" target="_blank" data-smartkarma-citation="entities:40152:1" rel="noopener">Kokusai Electric (6525 JP)</a> has been trading higher on expectations of index inclusion in August, but that could move to November now.</li>
</ul>



Kokusai Electric (6525 JP) could price their secondary offering after market close today. The stock is down 10.5% since the rumors of the placement began 7 trading sessions ago.
The Philadelphia Stock Exchange Semiconductor Index (SOX INDEX) has been dropping over the last few days and is 8.6% lower over the last 8 trading days.

Kokusai Electric (6525 JP) has been trading higher on expectations of index inclusion in August, but that could move to November now.


Kokusai Electric (6525 JP): Placement Price Could Be Determined Today; Index Impact Could Be Delayed

<ul>
<li>The first Act of this drama has played out in a very short time frame</li>
<li>The trend has likely changed for the JPY and it won’t be back to business as usual for the carry trade</li>
<li>This should benefit both real incomes and consumption in Japan</li>
</ul>


The first Act of this drama has played out in a very short time frame
The trend has likely changed for the JPY and it won’t be back to business as usual for the carry trade
This should benefit both real incomes and consumption in Japan


Are We There Yet? What Next for Japanese Assets?

<ul>
<li>There are 44 adds/41 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 7.9% and a round-trip trade of JPY 880bn (US$6bn).</li>
<li>The adds have outperformed the deletes over the last year though that has been faded over the last couple of months. Breaking with history, there could be outperformance near-term.</li>
</ul>


There are 44 adds/41 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 7.9% and a round-trip trade of JPY 880bn (US$6bn).
The adds have outperformed the deletes over the last year though that has been faded over the last couple of months. Breaking with history, there could be outperformance near-term.


JPX Nikkei 400 Index Rebalance: A Bunch of Chunky Adds & US$6bn Trade

<ul>
<li>A monthly review of how the markets and our themes are currently performing</li>
<li>Analysing what went wrong and what went right in stocks and sectors</li>
<li>Highlighting positions added or removed from the thematic investment portfolio</li>
</ul>


A monthly review of how the markets and our themes are currently performing
Analysing what went wrong and what went right in stocks and sectors
Highlighting positions added or removed from the thematic investment portfolio


July Themes and Thematic Portfolio Review

Japan

The TOPIX, also known as the Tokyo Stock Price Index, is a capitalization-weighted index of all companies listed on the First Section of the Tokyo Stock Exchange. The index is supplemented by the subindices of the 33 industry sectors. The index calculation excludes temporary issues and preferred stocks, and has a base value of 100 as of January 4, 1968.

TSE Tokyo Price Index TOPIX (TPX INDEX)

Sectors to Look at for the Japanese Stockmarket's Next Phase

JPY sensitive names and foreigner favorites may not drive the market; sectors independent of a weak Yen could be the next winners.

Rikki Malik

Kokusai Electric (6525 JP): Placement Price Could Be Determined Today; Index Impact Could Be Delayed

Kokusai Electric had run up versus the SOX Index. Then, Kokusai Electric underperformed the SOX during the selloff. With an early (surprise) index...

Brian Freitas

Are We There Yet? What Next for Japanese Assets?

The change in trend in the JPY will shift investor sector preferences and benefit segments of Japan's economy through increased real incomes and...

Rikki Malik

JPX Nikkei 400 Index Rebalance: A Bunch of Chunky Adds & US$6bn Trade

There are 44 adds/41 deletes for the JPX Nikkei 400 Index resulting in a one-way turnover of 7.9% and a round-trip trade of JPY 880bn (US$6bn)....

Brian Freitas

July Themes and Thematic Portfolio Review

We review overall market performance, our investment themes, highlighting additions and substractions in the thematic portfolio.

Rikki Malik

Sectors to Look at for the Japanese Stockmarket's Next Phase

​JPY sensitive names and foreigner favorites may not drive the market; sectors independent of a weak Yen could be the next winners.

Rikki Malik

Kokusai Electric (6525 JP): Placement Price Could Be Determined Today; Index Impact Could Be Delayed

Kokusai Electric had run up versus the SOX Index. Then, Kokusai Electric underperformed the SOX during the selloff. With an early (surprise) index...

Brian Freitas

Are We There Yet? What Next for Japanese Assets?

​The change in trend in the JPY will shift investor sector preferences and benefit segments of Japan's economy through increased real incomes and...

Rikki Malik

JPX Nikkei 400 Index Rebalance: A Bunch of Chunky Adds & US$6bn Trade

There are 44 adds/41 deletes for the JPX Nikkei 400 Index resulting in a one-way turnover of 7.9% and a round-trip trade of JPY 880bn (US$6bn)....

Brian Freitas

July Themes and Thematic Portfolio Review

We review overall market performance, our investment themes, highlighting additions and substractions in the thematic portfolio.

Rikki Malik

JPY sensitive names and foreigner favorites may not drive the market; sectors independent of a weak Yen could be the next winners.

The change in trend in the JPY will shift investor sector preferences and benefit segments of Japan's economy through increased real incomes and...